When your next is big, such as buying a car or paying for your studies, you may need to get a loan. Using your credit responsibly important. It helps with escaping the debt trap.
FACT 1 – Protect your assets
- Protect your assets like your car or house..
- You are liable for the total debt even if you sell the asset – it is your responsibility to repay the loan or credit in full.
- Tips:
- Make sure that you have insurance and that it covers the asset fully, including for theft, damage, etc.
- Read all the conditions of the credit life insurance policy, and understand what you are covered for.
- Look after your asset to maintain its value.
FACT 2 – Use credit responsibly
- Credit includes credit cards, store cards and overdraft facilities and can be useful tools.
- You can use for your needs, but you must manage responsibly so that you don’t spend it unnecessarily.
- Tips:
- Calculate what your purchase will cost with the interest added to see if you can still afford it.
- Get a notification service so you can see when the account is used.
- Check statements to ensure that you keep track of your expenses.
- Pay more than the minimum instalment whenever possible. This reduces the amount of interest and costs you pay.
- Always protect your PIN, and take immediate action if you think there is fraud on the card.
- Don’t rely on credit to make ends meet when you’re in financial difficulty.
FACT 3 – Use loans wisely
- Loans are usually taken for a particular purpose such as buying a house, to study, buying a car, etc.
- You need to repay the amount in instalments on a regular basis.
- Tips:
- Check your budget every month and revise it to help you meet all your payments.
- Make payments on time so you don’t have to pay more in interest and default fees.
- If unable to make a payment, contact your credit provider immediately.
- Select payment method that is most convenient for you.
Walletwise Tip
Only use credit for large purchases such as a house, car or education. Credit shouldn’t be spent on everyday items.
