CREDIT ACTIVE SOUTH AFRICANS AT RISK OF LONG-TERM FINANCIAL STRAIN
As Black Friday approaches, the National Financial Ombud (NFO) is urging credit-active South Africans to exercise caution and avoid the financial pitfalls associated with impulsive spending. With enticing discounts and “limited-time offers” on the horizon, many consumers face the risk of accumulating high-interest debt, jeopardising their long-term financial goals and well-being.
Howard Gabriels, Credit Division Lead Ombud at the NFO, emphasises that Black Friday can be a double-edged sword for those relying on credit to fund purchases. “While Black Friday offers can seem like an opportunity to save, the financial aftermath can be severe,” says Gabriels. “Unplanned, credit-based purchases can quickly escalate into unmanageable debt, impacting people’s ability to save for homes, education, retirement, or even essential emergencies.”
The NFO warns that impulsive Black Friday shopping, without a budget or plan, often results in consumers accumulating debt that lasts far beyond the sales season. This type of overspending can hinder South Africans’ financial goals, from owning property to securing educational opportunities for their children.
Avoid a “Jan-worry” Financial Hangover:
The NFO urges consumers to take initiative-taking steps to protect their financial well-being during the Black Friday period. “The most impactful financial gains come from disciplined spending rather than seasonal discounts. Do not end up being a mampara of the Jan-worry month because of impulsive spending,” Gabriels warns. Lastly, Gabriels reminds consumers to remain mindful that the NFO is here to investigate and resolve any unresolved credit-related problems that arise between consumers and credit providers (micro-financers, non-bank credit lenders, banks, clothing and furniture stores, telecommunication companies) which includes being declined credit without reasons provided, incorrect credit bureaus listings, contractual disputes, reckless lending allegations, disputed fraudulent purchases on accounts, debt prescription disputes, and more. He encourages those facing credit challenges to urgently reach out to the NFO for assistance.
Tips for Responsible Black Friday Spending:
To help South Africans make informed financial decisions this Black Friday, Gabriels shares the following tips:
- Set a Spending Budget: Determine a spending limit based on your current finances and stick to it. Setting a budget minimises the temptation to overspend and helps you focus on priority items.
- Avoid High-Interest Credit Options: If you must use credit, avoid high-interest credit cards or short-term loans that can lead to a cycle of debt. Choose lower-interest options and have a repayment plan in place.
- Prioritise Long-Term Financial Goals: Keep your financial goals at the forefront, such as saving for a home, retirement, or children’s education. Weigh the benefits of today’s purchase against tomorrow’s goals.
- Leave Room for Emergencies: Ensure you have an emergency fund. Spending all your savings on Black Friday can leave you vulnerable to unexpected expenses, which can result in additional debt.
- Monitor Your Credit Usage: Overusing credit can impact your credit score. Keep credit balances low to maintain your creditworthiness and avoid higher borrowing costs in the future.
To help consumers make informed decisions this Black Friday, The National Financial Ombud Scheme provides the following tips:
- Do your Research: Before diving into the sales, take the time to research products and prices. Reliable comparison tools can help gauge whether a deal is genuine or a marketing tactic.
- Budget Wisely: Create a detailed budget that accounts for holiday gifts, unexpected purchases, and new year expenses like school supplies. By setting a budget, you can prioritise needs over wants and avoid unnecessary spending.
- Be Wary of Unrealistic Deals: If a deal seems too good to be true. it is. Familiarise yourself with a retailer’s usual pricing to identify when discounts are genuinely impressive versus when they built on inflated prices.
- Shop Securely: Legitimate retailers should offer secure payment options. Use credit cards instead of debit cards when making online purchases to protect your financial information. Always look for the https://in the website URL as an indication of security.
- Recognize Common Scams: Be vigilant against phishing emails. fake websites, and social media posts offering impossible deals. Avoid clicking links in unsolicited messages, and only shop from reputable websites.
- Keep Records: Save receipts and documentation for all purchases. This will be crucial for returns or in the event of any disputes regarding fraud.
As the holiday season draws closer, The National Financial Ombudsman is committed to equipping consumers with the knowledge necessary to navigate the tricky terrain of holiday shopping. By spending wisely and remaining alert to potential fraud, shoppers can make the most of Black Friday and set themselves up for a financially stable holiday season and new year.
