Tips and Tricks to deal with reduced income during the COVID19 crisis

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There is so much information being thrown at us in the media at the moment and all of this just leads to more confusion. This article is meant to give small, relevant bits of information on some of the more important financial aspects of the #lockdown and #coronavirus crisis. Hope that these tips and tricks give you some help. If you feel that you have gained a bit from this article, please hit the like and share buttons at the bottom to help spread the word.

Payment Relief

There is NO blanket payment relief at the moment. Debt? You must still pay it. Insurance? You must still pay it. Renting a property? You must still pay your rent.

There are however SOME creditors in the market who have decided to offer some payment relief on a case-by-case basis. Below is a list of what we know is available so far, as well as some tips and tricks for you.

Standard Bank

Standard Bank logo

This bank has offered a payment relief scheme to its small business clients (under R20 mill turnover), Students and Consumers.

All consumers earning less than R7500.00 per month and having zero arrears on their accounts at the bank will automatically qualify for a three month payment holiday. This will be applied by the bank and you do not need to do anything to get it.

If you don’t want/need the holiday, out tip is to just carry on paying your normal installments.

There is some talk that the Bank’s automatic application of the holiday may be construed as negative option marketing, which contravenes sections of the National Credit Act. We will wait to see how this is addressed in the days to come.

More detail available here.


Nedbank

Nedbank will be offering tailored solutions to its business and personal accounts. There is no one size fits all solution on offer. You will need to contact the bank and discuss your situation with them and they will tell you what they can offer.

Nedbank has halved the minimum payment due on credit cards to 2.5% for the three months from April 2020 to June 2020.

Nedbank has agreed to waive any penalty fees on the withdrawal of investment funds, up to a maximum of R200 000.00.

The bank has set up a dedicated telephone call centre for the COVID-19 crisis. Get in touch with them on 0860 110 702.

They have also created a Q & A PDF document about this topic which you can download here.


First National Bank

FNB Logo

FNB has released their offering. They will be giving up to three months’ payment holiday to their clients who might need it.

You will need to have documentary proof that your income is reduced due to the COVID-19 crisis to qualify. All your accounts with FNB (and other accounts, they will check your credit record) need to be up to date.

More info available here.


ABSA

ABSA Bank Logo

This bank is also offering a payment relief program to all of its clients. They have not published any limitations on who may apply, but the standard seems to apply, your accounts at the bank must all be up to date to qualify.

There is no restriction on earnings for the offering from ABSA.

Read more here and here.


Summary

While the remaining banks haven’t made any announcements as yet, the likes of Wesbank and Capitec have said that they will make solutions available to consumers on a case-by-case basis. They urge their clients to contact them sooner rather than later though. The standard caveat is in place with all the banks, you must be in good standing with them to qualify for any assistance.

One important thing to remember when deciding on approaching the bank for a payment holiday, interest and fees are NOT waived during the period and will continue to be charged. Most of the options will see these additional fees and interest is payable at the end of the period (you could probably opt to capitalise them and pay extra every month). By leaving these amounts to be paid at the end of the period, the cost to you will end up being a LOT higher than the benefit received now in the short-term. MAKE SURE THAT YOU ABSOLUTELY NEED THE HOLIDAY BEFORE APPLYING!

Before rushing into applying for a payment holiday, there is a better option available for some consumers. Read about it in the next section.


Credit Life Insurance

Credit Life Insurance is a form of insurance that is normally taken out when a credit agreement is opened. This type of insurance covers events that normally lead to a person not being able to pay the credit agreement any longer. Such as; Death, Disability, Retrenchment, etc.

Any credit life policy signed since August 2017 was supposed to have an extra cover built-in. This was to cover a person in the event of loss of work or income and would pay the installment on the credit agreement for a maximum period of 12 months.

This new clause in credit life policies should also cover a person who is unable to earn an income in the situation we now face.

Before rushing into a payment holiday agreement with your bank, check if you have a credit life policy. The benefit here is that your policy would continue paying your installment for you while you can’t.

This clause on credit life policies should also apply to policies held by self-employed people. As long as you can prove that you are suffering a loss of income during the lockdown.

Tips and Tricks on How to check if you have a policy

Check your original agreement that you signed with the creditor. If you signed a CLI policy, there should be an agreement to that effect in the documents.

You can also check on your monthly statement from the creditor. If there is a policy included, you should see it being charged on the statement every month. This might only be charged annually on bigger agreements, like a bond.

If you aren’t able to tell using the above methods, call the creditor and ask them. They will be more than happy to confirm if you have a policy and to put you in touch with the insurer. At least they have a chance of being paid on the credit agreement if you have a claim.

Additional discussions on credit life

Financial Journalist, Maya Fisher-French, from Maya on Money has recorded a video post about this topic. View it below.

Go check your credit insurance NOW!

If your income has been affected by COVID-19, check your credit insurance before you opt for a payment holiday…

Posted by Maya on Money on Tuesday, 31 March 2020

Insurance Relief

While the banks have already released their options relating to relief efforts during the COVID-19 crisis, we are yet to see other businesses come forward with offers of assistance.

The one exception is Old Mutual Insure.

Old Mutual Insure Logo

Old Mutual has made far-reaching offers of assistance to their staff and clients during the crisis. Some of the specifics are listed below.

  • The option to defer payment of premiums, with a delayed pay back over a set period.
  • The insurer will be more lenient on missed premiums. The cause must be due to a loss of income caused by the COVID-19 crisis.
  • Temporary restructuring and reduction of policies to reduce premiums. For example, where a second car is not being used during the crisis, or business is locked down.
  • Immediate relief for iWYZE motor insurance policyholders. You must register on wyzeHUB before 30 April 2020. You will get an immediate 7.5% discount on your vehicle insurance premiums.

Read more detail here.


Banking Services

The banks ask that consumers use ATM’s internet banking and cell phone apps as much as possible. Only visit a branch where absolutely necessary.

Banks have agreed to waive Saswitch fees at this time. Consumers need not travel to their own banks ATM to transact. The banks are busy making changes to their systems to enable this. Any fees charged in the interim will be reversed in due course.

The banking staff is under just as much threat as we are at this time. They have made it possible for as many of their staff as possible to work remotely during the lockdown.

The banks advise that service delivery in branches may be affected and request patience at this time. They also ask that proper social distancing is practiced if you need to visit a branch.

In closing

At the moment the whole world is in crisis mode and everyone is under severe pressure. A lot of the problems that we are facing, we wouldn’t have believed possible 6 months ago.

There is no SOLUTION available at the moment to the financial worries facing us. There are numerous plans by different people, governments, departments, etc. But nobody knows if the solutions will work or not. Nor what the long term effect of the solutions will be.

At this stage, think clearly and do your homework before deciding on a way forward. Decisions that you make now in a time of worry can cost you thousands in the long run.


Important Tips and Tricks

It’s clear from all of the solutions, you MUST be in good standing with your creditor if you want help. This means that any decisions that you make, need to be made BEFORE you skip payments with your creditors.


If you have any questions about the points raised in this article, feel free to leave a comment below. We will be responding to all comments as soon as possible.

If you feel that this article gave you some valuable tips and tricks, please click like and share below to let your friends get the same tips and tricks.


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