Deeply indebted consumers must prepare for yet more pain after the Reserve Bank decided to increase the repo rate by 25 basis points pegging the rate at 6%.<\/p>\n
Neil Roets, CEO of debt counselling firm, Debt Rescue, said the increase comes at a time when electricity tariffs and the fuel price are near all-time record highs.<\/p>\n
\u201cDeeply indebted consumers are incredibly vulnerable to any price increases and the escalation in the cost of borrowed money is going to have a very real impact on them.<\/p>\n
\u201cHome owners with bonds to repay can expect a significant increase in their monthly repayments. It is also going to have a direct impact on the cost of all goods and services.\u201d<\/p>\n
He said the fact that total consumer debt now tops R1.427 trillion – according to the latest figures released by the reserve bank – shows that consumers are having a very hard time.<\/p>\n
\u201cWe know from figures released by the National Credit Regulator and Statistics South Africa that the majority of indebted consumers already owe 75% of their monthly pay to creditors. More than half are three months or more behind in their debt repayments.\u201d<\/p>\n
Inflation accelerated by 0.1 of a percentage point to 4.7 percent year on year in June from 4.6 percent year on year in May, Statistics SA data showed on Wednesday<\/span><\/span>.<\/p>\n \u201cThis is well within the reserve bank\u2019s target of three to six percent. However, there are concerns that inflation is set to rise in the next few months.\u201d Roets said.<\/p>\n Pensioners with investments will welcome a rate increase but with toll roads, an increased fuel prices and rising food costs, many consumers will be feeling the pain.<\/p>\n \u201cWe are seeing growing numbers of indebted consumers knocking on our doors as a last resort to try and get out from under their mountain of debt by going under debt review.<\/p>\n \u201cThis remains the best way from deeply indebted consumers to pay off their debt in smaller instalments over a longer period of time whilst enjoying full legal protection. None of their assets may be attached by debt collectors while they are under debt review,\u201d Roets said.<\/p>\n How much debt do you have?<\/a><\/strong><\/p>\n SA debt collectors in last-minute frenzy ahead of new law<\/strong><\/a><\/p>\nMore on debt in South Africa<\/h3>\n