For Immediate Release January 2024
The festive season is over, the new year is dawning, and sadly for so many cash strapped consumers the harsh reality of January expenses has been a rude awakening from their festive revelries. January is a difficult month, especially for those who did not budget and/or spend wisely over the festive season. Many people are paid earlier in December thus they wait long until the next pay day in January. This long wait leads to very empty pockets and many unpaid bills, as these consumers start the year on a tough note. Consequently, many are being forced into taking excessive credit as the only option to pay for necessities like rent/mortgage, food, school fees, stationery etc. Ms Poppy Kweyama, Manager: Education & Communications at the National Credit Regulator (NCR) says that in addition to the high cost -of- living, consumers might need to borrow excessively at this time of the year because of poor budgeting and last year’s reckless spending.
According to NCR’s statistics for the quarter ended September 2023, there is an increase quarter-on- quarter of impaired accounts. To avoid an impaired credit record, consumers are advised to borrow wisely and responsibly, and restrict credit to only what is necessary, says Kweyama.
Kweyama adds that during this time of the year, some consumers are desperate for financial assistance and may take out loans recklessly, even from unscrupulous credit providers. The NCR implores all consumers who find themselves in this situation to be credit smart and avoid resorting to unregistered credit providers. She advises consumers to borrow only from registered credit providers, borrow only as much as they need, borrow only when they need to, plan in advance how to repay the loans, and most importantly determine whether they can afford the repayments. For a comprehensive list of registered and cancelled / lapsed credit providers, consumers can visit the NCR’s website: www.ncr.org.za.
The NCR also encourages consumers to understand their credit agreements and the T’s and C’s before signing. Don’t sign if you don’t understand the T’s and C’s. Always ask for clarity and never pay an upfront fee. Never leave your ID or bank card with a credit provider in exchange for a loan, not only is this practice illegal, but remember, in order to register and exercise your vote in the 2024 elections, you need to have your ID! cautions Kweyama.
Remember, credit is expensive, before you decide to borrow first familiarise yourself with the fees and charges associated with the credit. According to the National Credit Act (NCA), consumers can only be charged the following fees when taking up credit:
• Initiation fees- This is a fee that a credit provider charges a consumer for entering into a credit agreement. The credit provider must give the consumer an option of paying this fee separately and once off, in doing so, no interest may be charged on the fee. Initiation fees are regulated by the NCA. Standard initiation fees for credit facilities, short-term credit transactions and unsecured credit transactions, in accordance with the NCA, is R165 per credit agreement plus 10% of the amount in excess of R1000 but the maximum initiation fee should not exceed R1050.
• Interest Rate- Interest is the amount that a credit provider charges a consumer on the outstanding balance of a credit agreement and is regulated by the NCA.
• Service fees-The fee that a credit provider charges for servicing and administering/maintaining the credit agreement. The credit provider can charge this fee monthly. Service fee can also be charged per transaction. The maximum monthly service fee in accordance with Section 105 of the NCA is R60.
• Credit Life Insurance- This is insurance which can be required by the credit provider when a consumer applies for credit. The insurance covers the debt due to the credit provider in certain cases such as retrenchment, disability or even death of the consumer. The insurance cover taken may not exceed the outstanding obligation to the credit provider.
• Other costs will depend on what you are purchasing as the consumers. Such as delivery costs etc.
About The National Credit Regulator
The National Credit Regulator (NCR) was established as the regulator under the National Credit Act (NCA), 34 of 2005 and is responsible for the regulation of the South African credit industry. The NCR is mandated with the registration of Credit Providers, Credit Bureaus, Debt Counsellors, Payment Distribution Agents, and Alternative Dispute Resolution Agents; and monitoring their conduct in compliance with the National Credit Act as amended. The NCR offers education and protection to consumers of credit in promotion of a South African credit market that is fair, transparent, accessible, and dynamic.
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Winnie Rabathata/ Didi Sebothoma