Kaya 959 Reporter
With the Black Friday weekend looming, consumers have been advised to be very careful, and not buy discounted items on credit as this could see them paying almost double the purchase amount when calculating the amount they will be paying back in interest.
Kaya Biz with Gugulethu Mfuphi spoke to Priven Moodley, who is the Head of Risk Solutions at TransUnion South Africa on how South African typically approach this period.
“We monitored accounts open specifically during the Black Friday period vs the ones opened during the course of the year.”
“We monitored them for a period of 6 months post trading, and notices that 3/10 of the accounts go into arrears 3 months later.”
“So while there’s a short term benefit of pricing, and getting that special deal is good, many consumer don’t take into account what they can’t afford 6 months down the line.”
According to Lee Naik, the CEO of TransUnion Africa, a study on consumer behavior during this period indicated the following:
· Higher consumption of credit for new facilities than existing facilities during Black Friday period. Across credit types there is a minimum consumption difference of 40% for new facilities over existing facilities.
· Younger age groups in 2019 consumed less credit when opening new accounts as opposed to those with existing facilities over Black Friday, yet in 2020 this changed and they showed to consume more.
· Consumption on existing accounts relative to prior Black Friday spend increased.
· Consumption of new accounts opened during Black Friday decreased post Black Friday period.
· New accounts opened in 2019 saw a minimum increase in spend during Black Friday to 2020 by 29% (clothing), 20.5% (retail instalment/furniture) 16% (retail revolving/general retail cards) and 14.7% (credit card). ·