Four ways to save despite taking up credit

Johannesburg- 2020 has taught many South Africans the value of applying good money management principles whilst servicing credit.

“Over the last year, many South Africans have had to revisit their budget and make meaningful financial changes. Being debt-free is possible but not always easy to achieve. However, there is an opportunity to explore avenues to free up additional cash flow through applying good money management principles while using debt in a responsible manner,” says Emma Mer, CEO of FNB Loans.

Mer shares four tips on how to apply good money management principles to free up cash flow even though you have debt obligations

1 Save on fees by switching

When you switch your qualifying credit into a single agreement you could save on monthly credit service fees. Your revised personalised interest rate might be lower than the interest on your previous repayments which can help you save on interest paid and in turn free up cash flow.

By switching, you can also free up monthly cash flow, or save on the total cost of credit over the lifetime of your loan, depending on what works for you.

2 Make sure that you benefit from maximum rewards and value-adds

 Reward programmes can unlock multiple ways of saving; it could be through discounts depending on your reward tier or through maximising your spending with rewards so that you can minimise your cash spend.

The ability to earn extra could be dependent on the type of products you hold and how you manage them – it’s therefore helpful to spend some time understanding the rewards programmes you form part of.

Spending in a certain way or at certain shops with your cards, setting up an auto-payment on your credit card or having certain products with your financial services provider could also help you to earn more rewards.

For example, when you hold your credit products with FNB, you can unlock more value and double your rewards with your FNB Aspire Account.

3 Keep track

The single most important rule when it comes to including credit into your financials is to ensure that you do not take on more credit than you can afford and once you have credit, to make sure you meet your minimum repayments every month.

A tool such as nav>>>Money on the FNB Banking App provides timely updates about your credit status that will help you manage your credit and earn eBucks in return.

4 Understand the cost implications of the products and offerings available to you

Lee Mhlongo, CEO of FNB Home Finance adds, FNB Life offers tailor-made insurance products to bolt on to your Home Loan, like Basic Mortgage Protection Plan (BMPP) or Dynamic Life.

These insurance products automatically adjust their coverage amounts and monthly premiums in line with the outstanding balance on your home loan.

Should you make any extra payments into your home loan, you’ll not only save on interest, but your BMPP or Dynamic Life cover and premium will also reduce. If you need to access money from your home loan again, your insurance cover will increase to make sure you remain fully protected.

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