How the fuel price hike will impact the 27 million credit active consumers
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The latest fuel price hike comes into effect after the four-day long Easter weekend, a time when consumers tend to spend more money on things like travel, entertaining and general consumerism.
And while there was some expectation that consumers would be locked down until harsher restrictions during this period, the President took an unexpected turn in the latest family meeting by announcing minor adjustments to the current Covid-19 restrictions.
“These increases, as well as the weakening rand are definitely no joke and those consumers who are already embattled with high costs of living will feel this in their pockets this month,” says Debt Rescue’s Neil Roets.
Roets says, “As with other popular holidays in South Africa, Easter weekend is definitely a money draining time of the year. Many people go on holiday, buy too much chocolate and have big lunches and dinners, leaving their wallets a lot lighter by the end of the weekend. This joie de vie will also be enhanced by our current circumstances as consumers will take any opportunity to have some fun, after a year of dealing with the pandemic and having been under lock and key.”
The result of over-spending and higher living costs will see a rise in credit use as consumers return from their holidays and are faced with their day-to-day realities.
Latest research from the National Credit Regulator (NCR) points out that cash-strapped consumers turn to credit to help manage their financial responsibilities, but the worrying trend is that those whose accounts are in arrears is almost 50% of the 27 million credit active consumers.
“This is a concern not least as those who are in arrears will also be charged a far higher interest rate when next they apply for credit, as they are found to pose a higher risk to the credit provider,” comments Roets.