If the COVID-19 pandemic has affected your finances or your job, you’re not alone. According to a TransUnion survey, eight out of every 10 South Africans say their household income has been negatively impacted by the pandemic, and more than 14% of people have lost their jobs.
How badly have people been affected? According to the survey, consumers expect to be R7,500 short of their usual income on average. This severely affects their ability to pay their bills. As a result, there has been a significant increase in consumers using the many payment holidays being offered by South African banks and lenders. Here are some of the debt relief options available to you if you’re struggling to make ends meet.
If money is tight and you’re worried you’re going to miss a payment or two, it’s best to contact your lender before the payment is due to make alternative payment arrangements. You can explain your situation and ask whether they can offer any assistance. Don’t just ignore your bills.
If you’ve been retrenched or put on unpaid leave due to the pandemic, you may be able to claim from credit insurance, which covers your debt repayments if you have a loss of income, are disabled or die. You might not even know you have credit insurance, so check your store cards, home loans and car finance agreements to see if it was included in your policy. Credit insurance could cover your debt repayments for up to 12 months, so it’s well worth checking.
A payment holiday is an agreement with your credit provider/s to temporarily stop making repayments on your loans for an agreed period of time. It is important to remember that you still owe the amounts that you haven’t repaid during your payment holiday. These will have to be repaid at a later date. Your credit provider will be able to explain all the details and how this will work. Taking a payment holiday will not be recorded on your credit report.
The worst thing you can do in a financial crisis is to just stop paying your bills, or to assume you will automatically get a payment holiday. Don’t stop paying until you have spoken to your credit providers. If you stop paying your bills without talking to your lenders, or making arrangements for a payment holiday, your credit score will be affected negatively.
We understand that you may be facing some tough financial choices right now. We encourage you to pay what you can to avoid late payments on your credit report. If you can’t make minimum payments, talk with your lenders to find out if they’re offering any assistance. The important thing is to pay all of your bills on time if you can. Paying on time is the biggest factor that affects your credit score.
Until the end of July, TransUnion is offering you free Credit Score, Report and Profile Alerts to help you make the right financial decisions and to protect your credit health.
To minimise the potential negative impacts of the pandemic on your credit profile, visit TransUnion’s COVID-19 website.