
Is it a good time to get into debt?
We can all agree that the cost-of-living in the country continues to get worse and consumers are gradually reaching the end of their financial ropes.
Kaya Biz with Gugulethu Mfuphi spoke to Rapule Mahlangu – Head of Associations and Affinity Groups at Metropolitan to answer whether or not it is a good time to get into debt.
LISTEN TO THE FULL CONVERSATION:
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Many people across the country are reaching out to their financial institutions for assistance in the form of loans, getting deeper into debt.
According to a TransUnion report on the second quarter of 2022, there has been an overall growth in credit activity in South Africa.
Mahlangu spoke about how the financial behaviors’ of many South African consumers when it comes to taking up debt.
“One of the situations we are faced with now, is that we have several string of interest rate hikes, debt has impacted consumers in a very negative way. There are several things one needs to take into consideration when taking up a credit facility, include the high interest rates, secondly is the debt servicing costs, your initiation fee, there is also a R69 administration fee you pay every month, for example if you have 10 credit facilities, you are paying R690.”
On the flipside, there’s advantages to debt at times, for instance if you cannot afford to pay cash for a property, you might incur debt by taking out a mortgage.
This in turn can enable you to invest your housing payments in real estate rather than continuing to rent.
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