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Stay away from debt in recession, cautions credit watchdog

Jun 09 2017 14:13

Cape Town - The National Credit Regulator (NCR) cautioned consumers to not take on unnecessary debt in a worsening economic climate after South Africa entered into a technical recession. 

On Tuesday, Statistics South Africa announced that the South African economy moved into a recession after GDP contracted for two consecutive quarters. In the first quarter of 2017, the economy recorded negative growth of -0.7% and in the fourth quarter of 2016, GDP contracted by 0.3%. 

READ: SA's in a recession: Here's what that mean

The recession heralds an even gloomier picture for consumers, especially ones who are debt-stressed. 

“We would like to reiterate our advice to consumers on how to attain financial well-being, and in this regard we recommend that consumers should scale down on unnecessary and luxury expenditures and to live within their means," said Mpho Ramapala, education and communications manager at the NCR.

"Consumers should also continuously assess their financial position in order to make realistic financial decisions." 

The NCR had words of encouragement for debt-stressed consumers. "They shouldn't despair, and should communicate with their credit providers to find possible solutions. Over-indebted consumers can also seek advice from registered debt counsellors or alternative dispute resolution agents,” said Ramapala.

READ: More consumers pawn cars to get loans 

The NCR also cautioned credit providers to lend responsibly to consumers, and to comply with the affordability assessment provisions of the National Credit Act.

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