consumerwatch: One bank has come up with a unique solution for its clients, by offering a cost-effective cash flow relief plan, as a separate credit agreement, writes GeorginaCrouth. Day53ofLockdown coronavirus
An estimated eight in 10 South Africans say their household income has been negatively affected by the Covid-19 pandemic and about 90% of them are concerned about their ability to pay their existing loans and bills. If the economy does not kick back into gear soon, that inability to service debt is likely to worsen.
Savvy customers have been wary about the offering, viewing this as yet another way to encourage indebtedness. Matthews said it feels like reckless lending, as the bank is giving new loans to people who technically have no income, and a number of people are likely to end up having no jobs or income by the end of April as well.
“Payment holidays sound quite nice,” Jooste says. “Customers view it as almost free. But these are three-month breaks and it's not as simple as extending the term. It means that interest is compounded, so in the long term, they will be worse off.”
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