Reserve Bank governor Tito Mboweni's 0,5 percent rise in the interest rate last week means the average household will have to pay R394,18 a month more on debt. So says Paul Beadle, managing director of Justmoney.co.za, South Africa's online guide to money management.
On a R1000000 mortgage over 20 years at prime minus 2percent, a 0,5percent interest rate increase will mean paying R357,99 more to service the mortgage.
On a five-year R100000 car loan, you will pay R26,96 more a month, while a R30000 personal loan on prime plus 15 percent over five years will cost R9,23 extra a month.
Beadle says if you have repayment problems, inform your bank immediately and discuss options available rather than defaulting on repayments.
"People are already struggling to meet their debt obligations, so an increase of this size is bound to push many people over the edge into over-indebtedness," Beadle says.
Homeowners feeling the pressure of maintaining bond repayments must dispense with all unnecessary expenses and do their utmost to retain ownership of their homes.
First National Bank will launch an advice-driven campaign to empower customers to make the best of their money.
"FNB recognises that the average consumer is financially stretched. Through this campaign, we will be differentiating ourselves by talking to our customers about effective ways of handling their financial affairs."
The bank's advice:
l Use free cellphone banking, online banking, ATM instead of branch. They cost less;
l To get the interest rate hike to work for you, consider fixed deposit accounts as a way to grow your money;
l Say "no" to borrowing;
l Change your spending habits by using your credit card wisely;
l Do not borrow to cover daily expenses;
l Use cash to strengthen your bargaining position at the point of sale.