The statistics published by the National Credit Regulator (NCR), as of June 2021, revealed that 61.59% (16.14 million) of the 26.22 million active credit consumers are up to date, while 38 , 41% (10.07 million) have impaired records. A damaged record is one in which a consumer and / or any of the accounts are classified as three or more payments or months in arrears, or that has an “adverse list”, or that reflects an administrative ruling or order.
The negative impact of Covid-19 over the past two years on consumer finances has caused some financial difficulties. Therefore, sales like Black Friday should be approached with caution by consumers to avoid reckless spending and borrowing and possible over-indebtedness.
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Given the hype and attractive advertising from different retailers, consumers are tempted to buy the “specials” and take advantage of the “deals” on offer. Such deals can take the consumer by surprise and cause unnecessary credit purchases. Remember that purchases on credit do not really equal savings, as you must pay interest and other fees. Remember, unplanned and impulsive purchases, especially on credit, can damage your credit history and lower your credit score. Therefore, it is wise to save and plan your expenses for Black Friday sales and the holiday season.
Consumers who wish to buy on credit must do so responsibly. Check and compare prices before the actual day to get the best deals. Before committing to a credit agreement, check your budget to determine if you will be able to pay the repayments. Always ask for a pre-agreement statement and quote and know the actual cost of credit after interest and all other fees have been added.
Tips for staying on top of finances during the Black Friday hype:
- Avoid impulse purchases. If you didn’t plan for this year, better save for other upcoming “specials” during and after the holiday season;
- Avoid borrowing from unregistered credit providers to feed your temptations;
- Set aside the amount you intend to use during Black Friday. Create a budget and stick to it. Shopping lists will help curb overspending and unnecessary purchases;
- If you are applying for a loan, only apply for what you need, don’t be tempted to apply for more just because you are told you qualify;
- Prioritize your debts – pay off your current debt first before spending money on “wants” and making new debts;
- Stop comparing yourself to your peers and colleagues, everyone has different affordability and budgets;
- Develop a culture of saving and try to save a little each month towards a goal;
- Always live within your means and not your imagination.
Anne-Carien du Plooy, Acting Director: Education and Communication at NCR.