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Think twice this Christmas before you add that extra packet of chips or bottle of cooldrink to your trolley – especially if you are paying by credit card.
Economists are warning that inflation and an increase in the interest
rate will hurt consumers, and will make it even more difficult to pay off debts.
The chances of the Reserve Bank increasing the interest rate next year are high, especially now that the Federal Reserve has raised interest rates for the first time since 2009.
Sanisha Packirisamy, economist at Momentum, said South Africa was by no means ready for the fallout from the Federal Reserve’s decision.
“While South Africa is still reeling from the recent harmful Cabinet moves, weakened investor confidence will prevent the rand from gaining meaningful traction,” she said.
The weaker rand has not been that visible in our shopping trolleys yet, but Packirisamy said the Reserve Bank had warned that the sustained weakening of the currency would mean inflation accelerating above the bank’s inflation target of 6%.
Karin Muller, head of Sanlam Growth Market Solutions, said most people never consider what credit really costs them.
Sanlam has calculated the costs of credit card debt for all those last-minute panic purchases – the R15 000 you spend on average on your credit card this festive season can end up costing you R23 000 once you have paid the card off.
Muller’s advice to consumers is: “Make sure you know what interest you pay on your credit card and consider it as an expense in your budget.
