Cape Town - It may not be such a happy start to 2015 for the 21 million indebted South Africans.
Ian Wason, chief executive of DebtBusters, said his company usually experiences a 50 percent spike in consumers seeking assistance with debt between January and February.
“With the lenders turning off the credit taps, it’s going to be harder for consumers to get credit to service the debt made in December. Banks like African Bank used to lend R2.5 billion a month, now they only lend R600 million a month,” said Wason.
The amendment to the Credit Act will also make lending that much harder.
“Lenders will now have to be rigid when checking consumers’ bank statements, outstanding debt and expenditure before giving them credit.
“Prior to this, the onus was on the consumer to tell the truth.”
Sugendhree Reddy, head of personal banking at Standard Bank, said:
“Too many South Africans live on credit and spend more than they earn. This is unsustainable and catches up with you sooner or later.”
She said when paying off your debt, you should focus on reducing the large amounts first.
“This saves the greatest amount of interest which can be used to pay off other smaller debts. Pay off your short-term debt first as it attracts higher interest.”
Wason said it was also important to sit down with a budget at the beginning of the year and put your expenses on paper. “Shopping around for affordable insurance is also a good way to save money in 2015,” he said.
He said damage control after festive overspending should be tackled as soon as possible. “A reputable debt counselling company can help you. But the later you leave it, the bigger your debt problems can become.”
Cape Times