4 Ways the repo rate drop can help you take control of your money
The South African Reserve Bank’s (SARB) announcement to reduce the repo rate by 100 basis points has offered South Africans some financial relief. For instance, consumers with a home loan of R1 million will now pay roughly R650 less per month.
While it may be tempting to spend this extra disposable income on unnecessary items, this money can rather be used to make a difference to your future financial health. Francois Viviers, Executive of Marketing and Communications of Capitec encourages consumers to use the repo rate change as an opportunity to relook their money matters, “This cut is an ideal opportunity to re-evaluate financial goals and take control of your money.
By following a focused plan, that puts the money to good use each month, you can really help your future self, live better.”
Viviers shares 4 of his top tips to take advantage of the repo rate drop:
Pay off your debt faster. Continue to pay off your debt as if the interest rate change has not taken place. Paying off a loan faster means that you’ll save on the amount spent on interest. Your future self will also thank you for those few less months of loan instalments, which can be used to invest in your future or for things you actually enjoy.
Tip: Pay off credit with higher interest rates first. Store and credit cards often have high interest rates when compared to other loans. Pay these off first to maximise your savings and where possible move to simpler and more affordable options. Capitec’s credit card offers low personalised interest rates.
Pay it forward to your future self. Use your bank’s app to setup a recurring monthly payment into a savings plan. Once you’ve built up a sizeable nest egg, which will be earning interest each month, you can use this money to buy a new household appliance, to go away on a holiday or even kick start that side hustle you’ve been dreaming about.
Study further. A recent poll conducted shows that 21% of South Africans name furthering their education as a savings goal. Use the monthly saving towards studying further, which could earn you a promotion or the opportunity to apply for a new exciting job.
Tip: Learning through an online institution such as Educate24 or GetSmarter allows you to study part-time from the comfort of your own home. Capitec clients get 50% off on all Educate24 online courses and R4 000 in savings when enrolling with GetSmarter via Capitec’s dedicated GetSmarter page.
Start that much-needed emergency savings. Build at least enough to cover three month’s expenses before you increase your debt repayments. It protects you from dipping back into debt each time there is an unexpected expense. This helps you break the habit of creating more debt.