A customer survey carried out and recently published by online credit lender Wonga South Africa has led to concerns about the way consumers manage cash and credit. The 2022 customer survey showed that many members of the public require better awareness of how credit works at the fundamental level in order to improve their overall financial well-being.
Over 18,000 customers took part in this particular survey, which found that weak saving habits was also a red flag for those in the most ‘at risk’ financial demographics, with a large number of people failing to save anywhere near enough cash for the future. The South African based online lender said that more education about saving and budgeting was needed in order to help people avoid serious debt problems. Wonga said many people were unable to save because of modest incomes and a constantly inflating cost of living crisis but also cited financial self-discipline as a keystone problem.
Around 43% of recipients knew what a credit report was, but over 77% said they didn’t take a good look at interest rates and other charges before applying for credit. However, more than two-thirds of people knew they could obtain an annual free credit report. The company urged consumers to read and fully understand their credit reports so they could report false information and work out the safest ways to boost their credit ratings.
Financial experts continue to campaign that the core financial life skills of saving, budgeting and investing needs to be promoted at a much earlier age to give children the best foundation possible from the time they open their first bank accounts. We also need to make these educational resources more accessible to adults who have missed this education in their youth to help them recover from financial hardship. This desire to improve the level of educational resources available resulted in Wonga creating their dedicated “Money Academy” financial resources hub. The academy contains a plethora of free bite-size resources to help people learn more about the four pillars of financial literacy; saving, debt, investing and budgeting.
Almost one-third of those surveyed said that they put money away each month. Many organisations have conceded that a large number of people simply do not have the means to save due to the small amount of total cash entering their accounts each month. Wonga claimed that more ‘collective responsibility’ was needed to protect and boost the financial well-being of the most at-risk consumers. They outline responsible credit provision as an important step towards ensuring a more stable credit market. The lender said poor debt management led to a weaker economy for the whole country. While this sounds ironic coming from a loan provider the statistics reflect that customers who have poor debt management skills do not make good loan customers. In other words, when financial literacy improves across a population as a whole – everyone is better off.
If you’ve found yourself needing to borrow money in the past despite your very best efforts don’t panic; there are many steps you can take today to avoid running into problems later on. We’re breaking this into a short list below for your convenience:
Only borrow money you know you can afford to pay back by the due date.
Only borrowing cash in emergencies that will cost you more money in the long run if you don’t take credit.
Shop around for the best deals and read the small print before you agree to borrow. Don’t agree to go ahead with borrowing until you’ve seen and gained a full understanding of the loan agreement. Make sure you know exactly how much the loan is going to cost you if you pay on time and if you’re unable to settle it by the due date.
Only borrow from reputable lenders and make sure the people offering you loans are who they say they are. Be wary of loan sharks and ‘pop up’ lenders online that haven’t been trading for much time. If you find an offer from a lesser known lending service that seems too good to be true, then chances are that it is.
Ask yourself some fundamental questions and make sure you know the answers to these before you proceed with a loan application: What will happen if you cannot pay by the due date? How severe will the penalties be? It’s essential that you find out this information before you proceed. Short term loans are not suitable for long-term borrowing, so be realistic and brutally honest with yourself about your credit needs.
Only borrow as much money as you need. The money should only be used for essentials like food or emergency repairs. It should not be used for socializing or unnecessary purchases. This may sound ridiculous to some of you but the survey data suggests that more than five hundred of those surveyed were taking out a short term loan so they could afford to purchase a new smartphone model!