By Jackie,
Dec 09, 2021 — 2021 is about to come to an end, which means celebrations of traditional holidays around the world, including South Africa are about to commence. For many South Africans, this means it’s time to start shopping. Needless to say, Black Friday, Singles Day and Cyber Monday have become very popular in Africa, and the number of businesses and consumers riding this wave of offers and discounts is increasing every year. In fact, compared to previous years, spending in South Africa during Black Friday 2021 registered an increase between 15% and 30%. While Black Friday is a date that allows South Africans to purchase all kinds of products to meet their needs, this also involves getting into unnecessary debt that can end up diluting any discounts they have been able to take advantage of.
South Africans Boost the Economy by Spending More
According to data from the First National Bank, the spending of its cardholders remained constant during the celebration and even increased compared to spending in 2020, accumulating an expense of more than R2.5 billion. Similarly, the payment service Payfast registered an increase in purchases of 30% with an average basket of R1,208. These figures are lower compared to those from 2020, but Payfast also had a 34% increase in the number of consumers.
According to TransUnion Africa chief executive Lee Naik, “Despite overall levels of consumer debt remaining high, we’re still anticipating a higher consumption of credit on new facilities compared to existing facilities during the Black Friday period across several credit types. “In a report by TransUnion, a high percentage of consumers requested new lines of credit to make purchases during Black Friday, and ended up spending 52% more than consumers with older lines of credit. Interestingly, South Africans are already heavily in debt, maintaining a household debt-to-income ratio close to 75%.
Better Sales Also Mean More Debt for South Africans
The problem is that most consumers apply for loans to make these purchases without realizing that they must pay interest which in the long term, doubles the original price of the purchased items. In fact, more often than not, consumers struggle to pay off these debts. Meanwhile, several experts recommend writing off bad debt as soon as possible. They also advise reassessing certain purchases to avoid bad debt in the future. Ideally, any consumer looking to apply for a loan should first conduct a credit health check.
It is not convenient for any consumer to go into debt and end up paying more money than they can afford to. Before trying to apply for any type of loan during the Black Friday season, it is important to consider all the costs and implications and how it can affect one’s financial future.
The author jackie Writing Jackie writingjackie@diamondmail.net.
