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Why you should use this interest rate pause to boost your financial situation

by , 20 May 2016
Why you should use this interest rate pause to boost your financial situation
Since the South African reserve bank decided not to increase interest rates again, you have a brief moment of relief to make sure that you get your financial house in order before the next rate hike. Now is the time to be more frugal with your money. It's not the time to make more debt or increase your spending.

The challenges for consumers in 2016 are far from over. No one know if the reserve bank will increase interest rates again this year, that is why you need to make sure that you're paying off as much debt as possible right now, to prepare for another rate hike later in the year.

 

South Africa’s economy is unstable – Protect yourself from harm

South African Investor contributor, Chris Hart is convinced that South Africa will be declared a junk economy before the end of 2016. He is also convinced that before 2019, you can expect the rand to hit R60 to the dollar.

This proves that the markets are going crazy! Tough times are ahead, which means that you need to start saving up more money now instead of making more debt.

With the repo rate unchanged at 7%. This means the prime lending rate stays at 10.50%. This is still quite high, which is why you need to make sure that you increase your savings and reduce your spending right now.

This might sound like a catch 22 but it really isn’t. The situation is clear cut.

We’re certainly not out of the woods yet, when it comes to inflation. In the short-term inflation will increase dramatically which means you’ll be spending more and getting less. By increasing your savings, you’re getting a higher return on interest. By increasing your debt, you’ll be paying higher interest rates.

So, you need to start paying more towards your highest interest bearing debts like credit cards and personal loans. Once these are paid off, put as much money away as possible. In the next few months, this cash will come in handy when you need it for essential items like groceries, petrol and general day-to-day living expenses.

 



Why you should use this interest rate pause to boost your financial situation
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