BELIEVE it or not, but the festive season is just around the corner!
December is a mere three months away and if you haven’t been planning your expenses for the festive season, you need to start now!
Mellony Ramalho, African Bank’s group executive for sales, said: “We never seem to plan properly for the festive season and we end up in crippling debt from overspending.”
Mellony suggested making a list of the items you will need to purchase, the amount of money you need to budget for and buying options.
Also called a layaway, a lay-bye is a way of paying for goods over an agreed period of time while the retailer keeps the goods until the consumer has paid the full price.
The consumer first pays a small deposit, and makes regular repayments after the price is paid.
“There’s no interest charged on lay-bye and you know the item will be available when you finish your instalments.”
The hire purchase
A hire purchase is an arrangement where a customer buys goods by paying an initial deposit – usually 40% of the total – and repays the other part of the cost over a period of time at an agreed upon interest rate.
“This option is generally used for high-cost items such as electronic goods, furniture, and so on. The upside is you get to take the item home straight away. The downside is that you will pay interest on the amount owed and if you don’t pay an instalment, the item will be repossessed.”
This is usually most people’s first option. Credit is when the consumer borrows money from a financial institution to buy an item and pays back the total owing over a period of time at an agreed-upon interest rate.
“Always remember: credit is NOT free. When you apply for credit, it is important to ask for a quotation or a pre-agreement that shows the different fees and costs that will be added to your agreement. Make sure that you deal with a reputable company that is registered with the National Credit Regulator.
“Whatever your plan for festive season expenses, the key is sticking to the plan.
“Don’t be tempted to dip into your December savings or put your other savings plans on hold to make other purchases.”