Picture: Thys Dullaart, Independent Media.
By Craig Newborn
The end of the year is rushing closer, and with it a sense of urgency for consumers to plan their big-ticket expenses and festive season shopping smartly.
Incurring hefty credit card costs for purchases over Black Friday and the festive season can leave consumers with unwanted debt that will only add to Januworry.
South African consumers are under pressure from a cost-of-living crisis and low levels of economic growth, with eight in 10 consumers saying they are feeling money stresses. This has led many to take on additional debt, with a recent household survey finding that 44% of consumers are struggling to pay off debt.
Craig Newborn, PayJustNow CEO, advises that consumers find smart ways to cover big-ticket end-of-year purchases by seeking financing options that suit their pockets. The end of the year is often a time of family holidays, road trips, Christmas shopping, and Black Friday, and buying back-to-school supplies. In the current economy, this requires smart thinking around how to budget and how to use innovative payment options to maintain healthy cash flow.
Newborn points out five common end-of-year purchases that often leave consumers paying off credit card debt and costly interest rate payments in the new year:
1. Road trips
South Africans love to take to the open road over the December holidays. But worn-out tyres or an unexpected puncture due to a pesky pothole could leave consumers forking over a hefty portion of their holiday funds for new tyres.
Several automotive fitment centres such as Tiger Wheel and Tyre offer buy-now-pay-later as a payment option, allowing consumers to split the cost into three interest-free payments while fitting their new tyres immediately, and only needing to fulfil the next third of their instalment on their next salary date.
2. Family holidays
Road trips are not for everyone. Some holiday-makers prefer the speedy travel of direct flights to their holiday destination. But last-minute flights can be very costly, especially during peak holiday periods.
3. Hosting friends and family
The end of the year is a time to celebrate with friends and family. It is also a time when consumers may need items such as decor, furniture, linen and load shedding essentials to ensure they can host in style.
Consumers can and should anticipate these costs well ahead of the end of the year and use the time wisely to find special deals and promotions.
4. Christmas presents
December is the month of giving and is traditionally the top month for retailers as millions of consumers flock to the stores.
In the lead-up to the festive season, it’s important that consumers avoid the temptation to use interest-bearing credit on items like Christmas gifts, especially around Black Friday, when shopper hype is at its peak. Newborn advises that you plan your gifting, and only purchase what you intend to, ensuring that the price point is within your budget.
If you are needing to stretch your budget a little further to make that one special purchase, a growing list of retailers have adopted buy-now-pay-later, which gives you the benefit of splitting your purchase into three interest-free payments. Think everything from Toy Kingdom for your little one, to NWJ for that special someone.
5. Back-to-school supplies
As Christmas comes to a close and the new year arrives, parents’ attention will shift to preparing for the new school year. Items such as school uniforms, stationery and other essential school supplies can put additional pressure on consumers still reeling from festive season purchases.
Newborn recommends that consumers start planning now and find budget-friendly options for key purchases. Buy-now-pay-later offers consumers a smarter, more responsible and more financially-savvy way to afford big-ticket purchases without incurring long-term debt.
By prioritising financial health, consumers can enjoy the festive season that much more knowing they have kept their finances healthy and free from worry.
* Craig Newborn is the PayJustNow CEO.
PERSONAL FINANCE