By Koketso Mamabolo
At the end of March, the Governor of the South African Reserve Bank, Lesetja Kganyago, announced an interest rate hike above what was expected by many economists. While some predicted no hike at all, others believe this may be the last one for a while. But the question remains, how can households and consumers prepare for another interest rate hike?
The struggling economy and rising inflation has left many unable to pay-off their debt. Speaking after the release of Capitec’s latest financial results, Chief Executive Officer Gerrie Fourie had a message for consumers:
“We are seeing consumers taking pressure with expenses going up and incomes coming down. I think what I want to say is, don’t keep up with the Joneses, live within your means.”
The consensus is that increasing interest rates has the effect of bringing inflation down, but it also means the cost of paying back any debt you might have increases, which could leave many consumers in a situation where they are unable to fulfil their obligations. Fourie mentions debt review as a way for consumers to overcome the challenge.
“Debt review has been positioned in the market as a solution to financial problems, and there is a certain portion of clients who need it because they are in a bad financial space.”
He goes on to say that for some it's better just to approach their bank to reschedule their debt.