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These are confusing economic times and cash-strapped South Africans are plagued by many questions. What do these changes mean for me? What must I do? How can I improve my financial situation? John Manyike, Head of Financial Education at Old Mutual, explains how the changes will affect your back pocket, and what you can do to manage them.
“In the grand scheme of things, the VAT increase means that every time you go to the shops, fill up your car with petrol, or buy any product or service that is subject to VAT, you will be paying more than you did in March this year,” he says.
But it’s not all gloom and doom, he adds. “While any increase in the cost of living is tough, there is light at the end of the tunnel in the form of the announcement by the South African Reserve Bank (SARB) of a cut in the repo rate by 25 basis points.”
The repo rate is the interest rate at which the SARB lends money to commercial banks, including Nedbank, Absa, FNB, Standard Bank and Capitec.
“When SARB lowers the repo rate by 25 basis points, it means your interest rate on your debt becomes cheaper by a quarter of a percent (0,25%), which is great news if you are credit active and have a home loan, car loan, overdraft, store card or credit card debt,” explains Manyike.
The credit bureau monitor released in December 2017 revealed that more than 25 million consumers around the country were credit active.
Of these consumers:
“These are scary statistics, as is the fact that more South Africans have loans than jobs, according to a report released in January 2018 by The Economist,” Manyike says.
He offers these seven vital tips to households burdened by debt:
“A smart consumer is informed and therefore better prepared for changes that will impact their pocket. You work hard for your income, it is your responsibility and no one else’s to protect it and use it wisely,” says Manyike.
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