Cape Town – An increase in the petrol price will no doubt have a huge impact on already over-indebted households, experts have warned.
BDLive reported on Wednesday that consumers should not get too used to the lower fuel price because the petrol price could once again breach the R13/l mark. According to the Automobile Association (AA) the price of petrol might go up by 90c/l.
This does not bode well for already over-indebted consumers.
According to Friedl Kreuser, debt expert at 6cents.co.za, a division of Summit Financial Partners, consumers must prioritise their debt so that they don’t fall behind on monthly payments and end up with tarnished credit records, court judgments, garnishee orders and repossessed assets.
Kreuser, one of Fin24’s debt experts, was responding to recent reports that the petrol price is putting enormous pressure on already indebted consumers.
He urged consumers to make paying their debt a priority. This would prevent them falling behind on monthly debt repayments.
South Africa has over 19 million credit-active consumers. Of them, nearly 10 million have impaired credit records.
Consumers are already struggling and an increase in the petrol price will no doubt have a huge impact on already over-indebted households.
While many struggling consumers will look to debt counselling as their saviour – even debt counsellors are urging consumers to look at basic means of reigning in out of control finances.
Roger Brown, chief executive of national debt counselling firm Credit Matters has warned of tough times to come.
“A substantial rise in the petrol price will have huge short term and long term effects.”
To start with, people will immediately have less disposable income, Brown said.
“Many South Africans already live below the breadline so the poor will once again be most negatively affected.
“In the long run, there will definitely be a knock-on effect and a price increase on food, transport, electricity and other necessities.
Brown maintains that one of the main reasons people are so hard hit by changes in the economy, is that they are still clueless about their true financial position.
“There is no longer an excuse for consumers to be uninformed about their finances,” he said.
“There is no magic wand which will make a bad debt situation disappear. Consumers should become pro-active and take control of their financial lives.”
As a debt counsellor, Brown has some tips for consumers:
* Don’t panic
* Never ignore letters of demand, final notices or a summons
* Make the time to go through your statements and learn exactly who your creditors are and what your balances owing, your installments, your interest rates and your credit agreement terms are
* Draw up a realistic household budget on paper – clearly defining the differences between luxuries and necessities
* Be assertive and approach their creditors and /or a debt counsellor if they see that they are struggling with repayments
* Change your lifestyle and cut down on unnecessary spending.
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