A South African bank has launched a desperate plea to its customers, asking them to spend wisely during December shopping madness to avoid falling into the debt trap blues of January.
First National Bank (FNB) said on Tuesday that its data revealed that customers tend to spend about 20% more during December than what they did throughout the rest of the year.
The bank said December minimum payments are mostly based on November balances which do not yet include holiday spending such as flights and accommodation – often bought on credit.
This, the bank said, creates a false sense of security and the illusion that your finances are in order and that there is room for extra spending.
“Although much of December spending contributes to a good holiday the reality of payments falling short in January due to December spending can put you on a financial back foot as you enter the new year,” FNB Credit Card CEO Johan Maree warned.
The shopping madness season has already kicked off in South Africa as Christmas and New Year’s Eve festivities draw near, with shopping centres and other commercial centres full to capacity, hosting happy holidaymakers and families keen to enjoy December life to the fullest ‘at all costs’, including debts.
But FNB said any wild and uncontrolled credit purchases can put them into big trouble comes January, the time for many once off expenses such as school fees, uniforms, timeshare levies, annual subscription fees and increase on installments for expenses such as retirement annuities and medical aid fees.
Minimum January credit payments are generally between 20% and 40% higher than the average for the balance of the year, the Johannesburg-based bank said.
“Consumers tend to forget that the monthly installment for December expenditure, which will be higher than other months, is also due for payment on top of all other January expenses. This is part of the reason why customers struggle to make their payments in January,” Maree said.
The January credit blues can be avoided through careful planning of your December and January expenses, he concluded.