Don’t get yourself into unnecessary “Black Friday” debt, warn experts

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ToBeConfirmed

Published Nov 23, 2022

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The biggest one-day bargain shopping event is hours away. South Africans' spending on Black Friday rising year-on-year, but experts have advised consumers to spend wisely.

In 2021, sales volumes on Black Friday tipped the scale at over R2.5 billion.

And experts predict that South Africans will turn to credit to splurge on items they cannot readily afford.

"Consumers need to think beyond Black Friday and manage their credit smartly to avoid falling into a debt trap ahead of the busy festive season," cautioned Tonia Pavlou, Deputy Chief Financial Officer (CFO) at RCS.

Pavlou advised consumers to spend wisely.

"Instead, Black Friday should be thought of as a chance to take stock and make a financial plan that will allow you to see the end of the year through without incurring unnecessary debt".

According to the South African Reserve Bank, the recent household debt-to-income ratio in South Africa stands at 75.1%.

South Africans need to become more aware of how the financial decisions they make today will impact them in the months and years to come,” said Pavlou.

CEO of National Debt Advisors (NDA) Charnel Collins believed that Black Friday could lead to debt if not handled well.

“The important thing is to shop wisely and not get duped into buying things you do not need. More importantly, consumers should avoid buying on credit all in the name of Black Friday.”

Collins warned that Black Friday was not the biggest discount shopping day of the year.

“There are far better discount opportunities throughout the year. Many retail outlets often inflate prices just before Black Friday to create the illusion that prices have decreased dramatically on the day,” warned Collins.

Consumer credit reporting agency TransUnion reported a rising appetite for credit cards since Q3 2020.

"Over 74% of all card originations came from Gen Z and Millennial consumers. Younger consumers are becoming more amenable to buying on credit and thus the debt ramifications are likely to follow,” said Collins.

Here are some tips the experts shared:

* Plan ahead to avoid falling prey to the frenzy.

* Make a list of essential items you need to buy.

* Set a spending limit and do not compromise on it.

* Anything that didn’t make the preliminary list should make be placed in the trolley or checkout queue.

*Before making a credit purchase, calculate how long it will take for you to pay the item off and how much interest will have accumulated by the time the item is paid off.

* If you are opting to shop online, start filling your cart with what you need;

* Online it's a case of fastest fingers first and adding an OTP when checking out on the day.

* Make sure all the sites you are shopping on are safe and secure.

"Think about Jan-worry (January). While there is nothing wrong with the occasional treat and enjoying yourself responsibly, there is nothing worse than waking up in January wondering how you will make it to the end of the month.” Collins added.