NCR Warning: 9.69 million financially impaired records

Coming from a financially tough year the National Credit Regulator (NCR) is warning consumers against extravagance that will push them further mess up their financial matters.

The warning comes as 2013, a year characterised by strong signs that multitudes of South Africans are suffering under mountains of debt, is drawing to a close. Obed Tongoane, COO of the NCR, said the credit health of consumers is deteriorating and cautioned consumers to use credit responsibly towards and during the festive season.

The NCR said the steep rise in the cost of living during 2013 is just one obvious sign of what has been an extremely tough financial year for the country as a whole.  “As the end of the year draws near, the National Credit Regulator (NCR) is urging consumers to start budgeting and planning wisely for the forthcoming festive season”.

According to the NCR’s Consumer Credit Market Report (CCMR), the total outstanding gross debtor’s book is sitting at R1.47 trillion. This represents money owed by consumers in the form of mortgages, vehicle finance, credit cards, store cards, personal loans, short term loans, pension and insurance backed loans.

The Credit Bureau Monitor (CBM) for the quarter ending June 2013 showed that there are 20.21 million credit active consumers of which 10.52 million are in good standing whilst 9.69 million have impaired records.

An impaired record refers a consumer in arrears for three or more payments or has an adverse listing. Tongoane the impaired records figure are worrying. “We advise those consumers who are finding it difficult to service their monthly debts to discuss their situations with credit providers before it is too late”.

Statistics from the NCR also show that since 2007 over 455 000 consumers have applied for debt counselling.

“It is imperative that consumers commit to living within their means in the coming festive season to avoid the January blues and over-indebtedness,” said Tongoane.

The NCR advice:

Things you need to cut out/adjust are:

  • Alcohol
  • Tobacco / cigarettes
  • Reduce entertainment costs
  • Club memberships
  • Pay/Satellite TV
  • Gambling
  • Where possible use public transport

Below are some of the things that consumers should check in order to get ready for the festive season:

•             Start drafting your festive season budget now. Remember to include items such as gifts, parties, travelling during the festive season, January transport, and grocery costs etc, as many people will only be paid end of January 2014.

•             Obtain a copy of your free credit report from more than one credit bureau. Remember there are 13 registered credit bureaux.

•             If you are battling with your debts, speak to your credit providers to negotiate lower instalments. Do not wait until you receive final demand letters.

•             If you have already spoken to your credit providers and they cannot assist you, seek assistance from a registered debt counsellor by contacting the NCR on 0860 627 627 or log on to www.ncr.org.za for a list of registered debt counsellors.

The NCR said a consumer is considered to be over-indebted if money available after payment of essential expenses is not enough to pay all other debts. “Avoid getting more debt and strive to pay your current debts. You can do this by downgrading and changing your lifestyle. It has to be noted that downgrading does not mean that you will never rise up again, use it as an economic strategy that will assist you to get by until you are back on your feet again,” said Tongoane.

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