For many South Africans, the unchanged repo rate is a double-edged sword, according to Rynhardt de Lange, director and head of Legal, Milaw Legal.
This comes after the South African Reserve Bank's (Sarb) Monetary Policy Committee (MPC) announced its decision on Thursday to keep the repo rate unchanged at 8.25%.
De Lange said that one hand, it offers some stability in borrowing costs, which can be crucial for people with existing debt.
On the other hand, it underscores the persistent economic pressures that continue to have an impact on the everyday lives of consumers.
De Lange said: "The decision by the SARB to maintain the repo rate at 8.25% reflects the ongoing challenges within the South African economy.“
“Inflation remains the top concern for 75% of consumers, followed by macroeconomic volatility at 55% and social inequality at 40%. These issues are deeply interconnected and have a significant impact on the financial stability of many households.”
De Lange said that debt-strained South Africans are particularly vulnerable in this economic environment as inflation drives up the cost of living while economic volatility makes income less predictable therefore managing debt becomes increasingly challenging.
De Lange offers tips to help people struggling with debt:
Review and prioritise
Start reviewing all your debts and then prioritising them based on interest rates and urgency. People should focus on paying off debts that have high-interest to reduce the overall financial burden.
Budget
Draw up a realistic budget that takes into account all your expenses and stick to it. By doing this you can avoid unnecessary spending and make sure you have enough to cover your debt obligations.
Seek professional help
Look into consulting with professionals like a financial advisor or a debt management service. They can offer you personalised advice as well as help you develop a feasible debt repayment plan.
Explore debt mediation
People who are significantly over-indebted should consider entering into a debt mediation process that can help restructure debts into more manageable payments.
Stay informed
Keep track of economic trends and updates from the Sarb and other financial institutions. Having an understanding of the broader economic context can help you make informed decisions about your finances.
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