Advice on the issue of whether to “Buy Now Pay Later:”
Your credit health is very important; and with a poor/bad credit record and blacklistings; many doors for financial assistance, loans, opening accounts, credit cards, study or employment will simply close in your face.
You need to keep a good credit record. Look at these statistics.
- There are 19.35 million credit-active South Africans.
- About 15% of them have judgements or administrative orders against their names.
- In December 2016; 37784 judgements were granted countrywide against SA Citizens in the Courts throughout the RSA.
- The total Judgments for 2016 in the RSA against consumers was 527467. That is over Half a Million!
- Of the more than 19 million credit active people mentioned in 1 above; 8.9 million are more than 3 months in arrears on their credit payments.
Those are scary figures!
Debt, in general, is not being paid off fast enough and the rising cost of living is playing a significant role in this issue.
One of the easiest ways to get into unmanageable debt is to spend up a storm on store cards and credit cards. If you always adopt a “ buy now, pay later” attitude; you will soon learn that when it gets to the “later”, you could well find that you are having to spend almost your entire monthly income repaying expenses that you have incurred in earlier months. Store cards and credit cards become a problem when they can end up covering expenses that you should be budgeting for every month. If you can’t afford to feed or clothe yourself and your family on your income, you should really be cutting back elsewhere, not going into further debt each month. Be very wary of taking on too much credit at a number of different stores and banks as you may lose track of the total debt that you have now accumulated. When this happens the seemingly insignificant repayments quickly add up and you end up spending too much of your monthly salary just servicing debt. This is when you start to default and this rapidly escalates and your debt spirals out of control.
There are a few things that you can do to get your financial situation under control.
- Communicate with your creditors and if you can work out with them an alternative agreed repayment plan.
- Look at all your credit and store card accounts and work out which is costing you the most in interest each month. Do your best to settle the most expensive first. You could even approach your bank for a loan to pay back all your store card debts so that all your debt is at one institution with affordable repayments. This process is known as consolidation of debt.
- Once you have repaid your debt in full; do NOT be tempted to take on new debt and have to repeat this stressful process.
We trust you find these tips helpful.
The Legal Advice Office Team.