Hurry – Limited stock available’! ‘Buy one Get one FREE!’ ‘Offer expires soon!’ ‘Buy three only pay for two!’ ‘Up to 75% off!’ Can you tell the difference between an attractive offer and a trap just waiting to part you from your money? Easter season is the perfect time for shops to lure consumers into making unplanned purchases. Many consumers fall victim to luring advertisements and respond to these without thinking of the consequences of the purchases. 

That’s according to Mr. Nicky Lala-Mohan, the Credit Ombud who says that many consumers only wake up when things go pear-shaped. “There are ways of avoiding financial crisis by staying close to your finances and credit,” adds Lala Mohan. 

The Credit Ombud gives consumers simple, to the point – yet crucial information to keep abreast of their finances: 

On over spending: 

– The number 1 formula for misery is spending more than you earn. Many consumers over- stretch themselves by taking out more credit than they can actually afford. Some go as far 

as using credit to fund their day to day expenses – one of the clear signs that consumers are overspending. Tip: Use only 35% of your income to service debt. 

On managing your monthly obligations: 

– It is important for consumers to understand that when they take out credit, the information is recorded in the credit bureaus. All payments made, all skipped payments, all late payments and delinquent accounts are recorded in the credit bureaus. This information is available for credit providers and potential employers. Tip: Don’t take your contractual agreement with the credit providers for granted as poor credit management can lead to an impaired credit report. 

On your credit score: 

– Your credit score is your credit reputation. It is one of the useful information that credit providers use to decide whether to extend credit to you or not. One of the important factors when calculating a credit score is your monthly payment behavior. Tip: Always pay your credit installments in full, every month, on time. 

On outstanding debt: 

– When taking up credit, you agree to pay the minimum agreed amount for the entire credit duration until the debt is settled in full. Sometimes – it does not happen that way. 

Consumers fall behind with their debt and in some cases don’t know what to do. Some credit providers harass consumers with messages, phone calls, emails and threatening letters. When these efforts to collect on outstanding debt are ignored, consumers find themselves ‘blacklisted’ (negatively listed) in the credit bureaus, judgments taken against them in court and some having garnishee orders ordered against their salaries. Tip: Unpaid debt has a way of finding you – don’t wait- Communicate! 

On over indebtedness 

– Consumers don’t have to hide when they are over indebted. There are options available for consumers to consider to avoid further steps like repossession. 

1. Reduced payments arrangement to avoid legal action and repossession. Consumers can negotiate a lesser installment amount when experiencing financial constraints 

2. Consolidation of debt in the form of a single, big loan to pay up all other loans so that the consumer pays one installment as opposed to many other installments. 

3. Debt counselling is a court process facilitated by a debt counsellor who restructures your debt by negotiating new payment agreements for you. This process attracts debt counselling fees and consumers cannot withdraw from the process until debt is settled. Tip: consumers need to find the best option to repay their debt that is less detrimental to the credit profile. 

Consumers can contact the office of the Credit Ombud for FREE assistance if they experience any issues relating to credit agreements with non-bank credit providers such as the clothing and furniture retailers as well as micro-lenders, fraudulent listings, emolument attachment orders (“garnishee orders”) or general complaints about their credit bureaux listings. The office can be contacted on 0861 66 28 37; on the website www.creditombud.org.za; email us at ombud@creditombud.org.za or send a sms to 44786 and we will call you. 

If you would like more information about this topic, please contact Salem Nolubabalo Nyati , Public Relations Manager at 0792243802 or email at snyati@creditombud.org.za.