Implications for Consumers and How Debt Review Can Offer Relief  

Debt laden South Africans will face more pressure following the latest announcement by the Monetary Policy Committee (MPC) to increase the repo rate by a further 50 basis points to 8.25% – the highest since 2009. But Debt Review can provide a much-needed lifeline.   

While the repo rate hike decision reflects Treasury’s efforts to curb inflation and stabilise the economy, Charnel Collins, National Debt Advisors (NDA) CEO says that the implications for consumers in debt are far-reaching.  

“The repo rate hike will lead to an increase in borrowing costs for consumers. Interest rates on various forms of credit, such as mortgages, personal loans, vehicle asset finance and credit cards are likely to rise. This means that consumers will be paying more on their monthly debt repayments,” says Collins.  

She explains that this will place additional financial strain on consumers who are already struggling with debt, as higher interest rates translate into more expensive debt repayments, potentially pushing some individuals and households into further financial distress.  

“As consumers allocate more of their income towards debt repayments, their disposable income decreases. In other words, they will have less money to spend on basic day-to-day expenses as more funds will have to be allocated to their debt. This reduction in disposable income can impact spending patterns, limiting the ability to save, invest, or make provisions for the unforeseen future. When this happens, consumers often cancel insurance, life cover, and funeral policies - leaving them open to bigger risk factors. Should anything unexpected happen to them, the consumer will not have the needed protection.”  

Critically, Collins adds that the latest 50bps interest rate hike has been the 10th interest hike since November 2021. This means that the Repo rate has increased by 100%, having a profound impact on South Africans who are paying off their home loans, vehicles and credit card debt “As an example, if you are paying off a bond of R2 000 000, you will need to fork out an extra R689 a month as your monthly bond repayments over a 20-year term will increase from approximately R20 985 to R21 674.  

“For people struggling to make their monthly payments to their debt obligations or who foresee that they are unable to meet all their monthly payments, debt review can help greatly. When consumers apply for Debt Review, their Debt Councillor can negotiate much lower interest rates which means that when the creditors accept such negotiations, the consumer will benefit from a locked-in interest. Consumers will then only pay the agreed interest percentage and will not likely be affected by any additional interest hikes in the unforeseen future,” explains Collins.  

Debt review, also known as debt counselling, has many benefits during these uncertain times. “It allows for consumers to pay one monthly instalment towards all their debts at a lower interest rate, with the added benefit of not being exposed to any legal action, provided they stick to the program. It will also allow for consumers to gain helpful insights on managing expenses and become debt free sooner,” says Collins.  

By having your finances managed by professional and experienced Debt Councillors, you are investing in your peace of mind knowing that your money matters are taken care of,” concludes Collins.  

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About National Debt Advisors
National Debt Advisors is South Africa’s number one debt counselling company and is perfectly positioned to help South African consumers who are struggling with their finances, become debt-free in under 60 months. NDA will negotiate with creditors for reduced monthly interest rates and extended terms – ultimately consolidating all debt repayments into one lower monthly installment - whilst protecting consumers from harassment by creditors, securing their assets against repossession and leaving them with more money left to live on. NDA will help South Africans gain their financial freedom.