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Current interest rate and inflation are red lights for debt

During November South Africans experienced yet another interest rate hike. Inflation keeps on increasing due to things like higher food and fuel prices and higher electricity and municipality tariffs. Employees expect salary increases to counter inflation, which only is possible if prices of products and services are increased. Where does this leave the average person who already struggles with debt?

“This snowball effect unfortunately worsens the debt situation by causing people to max out their credit cards,” says Martheli Kruger, lawyer at DebtHealth. “Festivities are picking up this time of year and it is indeed beginning to feel like Christmas. Increasing an already burden of debt may seem to be the easy way out, but it will unfortunately only worsen the situation.”

The reality is that the economic situation in South Africa will not be returning to normal anytime soon and it is expected for inflation to only stabilise by the second quarter of 2024. The Reserve Bank needs to make decisions to protect the value of the rand, especially for foreign investments.

“If you look at this, it is clear that your personal finances are a huge responsibility and that fluctuations in interest rates and inflation will not put you in a more favourable financial situation at all. Think twice this festive season. Give yourself and your loved ones the gift of self-control and moderation. Let us remember once more what Christmas time is about and focus on enjoying quality time together. Play games, sing along, read a book, watch a Christmas movie on the couch with popcorn and enjoy the things that money cannot buy.”

WhatsApp DebtHealth at 060 365 7889, send an email to clientcare@dhsa.co.za or visit the website. Drini Oosthuizen, debt counselling guru, will be in touch.

Photo by Alesia Kozik

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