The recent increase in the repo rate has been placing greater financial pressure on South African consumers. The fluctuations have had a wide impact on consumers that utilise some form of debt. 

What Is An Interest Rate?

An interest rate is the amount charged on top of the principal (loan amount) by the lender to the consumer. To give an example, when borrowing from a credit provider or bank, they will charge you interest on your initial loan amount. An interest rate is usually calculated as a percentage of the outstanding balance and is taken as part of the monthly instalment paid by the borrower. For credit providers and banks, charging interest is how these institutions generate income. 

What Is The South African Repo Rate & What Does It Mean?

The South African repurchase rate, or repo rate as it is most commonly known, sits at 7,75%. In the last two years, South Africa has seen large spikes in the repo rate. According to The South African Reserve Bank, since August 2022, the repo rate has increased by an additional 2,25%, a staggering amount. But what does the increase in the repo rate mean for South Africans? Subsequently, goods, services and credit will be much more expensive. Therefore, it is crucial to save money wherever you possibly can to build yourself a safety net to try to avoid more debt utilisation.

How Does The Repo Rate Affect Consumers?

The direct effect on the increase on the repo rate means that South Africans who utilise some form of debt, including loans, vehicle finance and home loans may have to pay more than originally budgeted for. This means that consumers across the country are most likely starting to feel the financial pressure as their monthly repayments become more expensive. This can lead to a number of financial issues down the line, including utilising more debt to cover living expenses or repaying debt. 

Why Does The Repo Rate Fluctuate? 

The repo rate fluctuates due to the South African government intervening on the inflation rate. According to the South African Reserve Bank, as consumer spending increases, so can the borrowing rate. This means that the government has to step in and make borrowing more expensive for consumers. This can weaken the demand for borrowing significantly and promote consumers to save money rather than utilising more debt.

Prediction For The Next Two Years

According to, the prediction of interest rate in South Africa for the next two years will be around 8.25% in the first quarter of 2024 with a hope of a significant decrease to 6% in 2025. The decrease to 6% will present a major relief to consumers with loans, credit cards, vehicle finance and home loans. 

The Protection That Debt Counselling Can Offer

As a registered debt counsellor with the National Credit Regulator (NCR), we are able to negotiate a lower instalment and interest rate with your credit providers. With our affordable repayment plans, we are able to fix your interest rates for up to 5 years. This creates a great opportunity for consumers to save money where possible during the entire process. The reduction in your monthly instalment and interest rates will allow you to afford all your debt and ensure financial stability. 

If you are looking for an effective debt solution, contact us today. Our highly skilled and experienced team will assist you in your journey to becoming debt free.

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