Jan Steyn | It is not all doom and gloom: how to make the most of the interest rate hike

South Africa has been hit hard by the global interest rate hike, in November 2022. The South African Reserve bank announced that the repurchase rate will increase by 75 basis points to 7%.  If you have savings, then this is great news, but if you have loans or trying to get a loan, well then it’s a different story.

The interest rate hike affects consumers by making it harder for them to apply for loans and purchase goods. Consumers may assume high-interest rates are just negative, however some of the more positive effects of the interest rate hike includes: controlling inflation, encouraging consumers to save and to review their financial situation.  

Financial institutions may be stricter when it comes to granting credit, while consumers are unable to apply for credit because of their affordability and low credit scores. Jan Steyn, Regional Manager: iLend at iMasFinance, shares tips on how to improve your credit score so that you could qualify for a loan:

1. Consider consolidating your debt. Bring all your loan accounts into one for only one monthly payment. Paying multiple debts can get stressful and confusing, but you can avoid the risk of forgetting to pay some of your accounts by paying one payment.
2. Pay your bills on time and set up automatic debit orders:: Ensure you are in good standing with your credit providers by not missing payments and having automatic payment that goes through to your credit providers on the day you get your salary. Paying late can increase your interest rates which means you end up paying more than you planned. 
3. Pay off ongoing debts, the sooner you pay off debts the better your credit score. Whether it’s that clothing account you first opened in varsity or the new furniture you bought on credit, setting a timeline of when the debt will be paid off is vital. The time it takes for you to pay off retail accounts and credit card debt affects your credit score - always make sure you set an end date for paying off these accounts.
4. Avoid applying for multiple loans in a short time span. The more loans you have the more debt you will accumulate, this may be perceived as a credit-hungry consumer that may be a risk to credit providers. Not only will you be considered a risk, but you will ruin your chances of getting credit in the future.
5. Pay more than the minimum required amount of the instalment. Try to pay at least 30% more than your instalment, this will help ease the interest and your debt can be paid off faster.

The increased interest rate may be a cause for concern, however it is also an opportunity to examine your financial situation and put plans in place to manage your debt more responsibly. “iMasFinance is your caring financial wellness partner, offering financial wellness workshops at companies that have an agreement with iMasFinance, at no cost to the company or its employees” says Steyn.