How Debt Consolidation Works in South Africa: Pros, Cons & Cost Math
Juggling multiple retail store accounts, credit cards, and micro-loans means paying multiple R69 monthly service fees and managing different debit order dates. Here is how to evaluate whether a debt consolidation loan will genuinely save you money.
How Saving on Multiple R69 Service Fees Adds Up
Suppose you hold five separate credit agreements—three store accounts, a credit card, and a small personal loan. Even before interest is calculated, paying R69 per month on five accounts costs R345 every month (R4,140 per year) in service fees alone.
Consolidating those five balances into a single personal loan reduces the monthly service fee to a single R69 charge, saving R276 per month in admin fees.
The Golden Rule: Watch the Repayment Term
While stretching a consolidated balance over 60 or 72 months drastically lowers your monthly debit order, it can increase the total rand interest you pay if you keep the loan for the full term. Aim to keep your consolidated repayment period as short as your budget allows, and never run up new balances on the store cards you have just paid off.
Frequently Asked Questions
Is debt consolidation the same as debt review?
No. A debt consolidation loan is a normal personal loan for creditworthy borrowers, whereas debt review (debt counselling) is a statutory legal process for over-indebted consumers under Section 86 of the NCA.
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