Pretoria:As the eagerly anticipated Black Friday approaches on 27 November, the National Financial Ombud (NFO) is advising South Africans to remain vigilant and not allow the allure of bargains to cloud their financial judgement.
According to South African Government News Agency, the NFO has highlighted the potential risks associated with purchasing items on credit during sales events, noting that such purchases can lead to total costs far exceeding the advertised sale prices. Nerosha Maseti, the Banking and Credit Lead Ombud at NFO, emphasized that while discounts may lower the purchase price, financing these purchases can result in long-term financial commitments.
The NFO warned that low monthly instalments can mislead consumers into believing they are more affordable than they actually are. For instance, financing a product priced at R6,000 over 24 months at R350 per month would result in a total payout of R8,400, with additional costs from interest, administrative fees, and insurance potentially adding 40% more to the original price.
Additionally, the NFO anticipates increased interest in Buy Now, Pay Later (BNPL) arrangements during Black Friday promotions. While some BNPL programs offer interest-free payment plans, the NFO cautioned that such conveniences might lead to multiple purchases, collectively straining household finances.
Maseti pointed out that credit approvals under the National Credit Act 34 of 2005 should not be misconstrued as indicators of financial health, stressing the need for consumers to conduct their own assessments of repayment sustainability.
Furthermore, the NFO reminded consumers of their rights under the Consumer Protection Act to return defective goods but noted that returning a product does not automatically cancel the associated credit agreement. In such scenarios, it's crucial for consumers to inform their credit provider and ensure their loan balance is appropriately adjusted.
To avoid long-term debt traps, the NFO advised consumers to compare the total cost of purchases, set realistic spending limits, and understand their credit agreements thoroughly. Consumers experiencing issues with non-bank credit providers are encouraged to resolve complaints directly with those institutions, or contact the NFO’s Banking and Credit Division for assistance.
For further assistance, contact the NFO at 0860 800 900, email [email protected], or visit www.nfosa.co.za.