The use of credit can make managing your finances much easier, but it is also a major responsibility that must be handled carefully.
Having access to the various types of credit facilities banks offer – credit cards, bank overdrafts, home loans etc. – is not just about convenience; they are also vital in times of crisis or for important life decisions, such as the purchase of a property.
Theunis Kruger, Head of Unsecured Lending at Standard Bank, gives effective tips of how you can borrow credit responsibly and recognise the warning signs that you’re borrowing is getting out of hand.
- Try to pay all your bills on time and do not take on more debt than you can handle.
- Include the loan repayments into your monthly budget.
- Do not finance purchases longer than the lifespan of the product you are buying. For example, financing a car over a long period is a good idea, but everyday purchases should be financed for short periods.
- Try to pay off your current loan before you take out another.
- Understand each and every cost you will be incurring by taking out a new loan.
How to see if your borrowing is getting out of hand
- If you pay your bills late consistently and make only the minimum payment each month.
- If you’ve exceeded the credit limit on one or more of your accounts.
- When you begin using additional credit to pay existing credit. If you can identify with any of the above points, seek the advice of your Financial Advisor.
“It is important to realise that credit is available to enhance your lifestyle and to help you achieve your goals. You will be obligated to repay the money you borrow within an agreed amount of time. This is not a reason to avoid the credit facilities on offer, however; if you manage your accounts responsibly and timeously, credit will have a positive, stress-free impact on your life.” Concludes Theunis.
