FNB CEO Michael Jordaan says yesterday's 50 basis point interest rate hike by the Reserve Bank reflects a deterioration in the country's economic conditions due to forces beyond our control. He warned that more bad news could be on the way and urged South Africans to take a conservative view to their financial circumstances and make the necessary adjustments within their means.
“To assist customers during this period, our bank will this weekend launch an advice-driven campaign that will empower them to make the best of their money amid the deteriorating interest rate outlook, compounded by rising fuel and food costs.
“We recognise that the average South African consumer is financially stretched right now. Through this campaign, we will be differentiating ourselves by talking to our customers about effective ways of handling their financial affairs.
“An extension of our brand positioning of helpfulness, the campaign is informed by the current economic down-turn and seeks to empower banking customers with appropriate instruments to beat the cycle by aligning their financial behaviour with the changing times,” says Jordaan.
The campaign stands on key legs, among which are:
• Transact
Use banking channels that cost you less e.g. free cellphone banking, online banking, ATM instead of branch, your own bank's ATM and if an FNB client, manage your finances by InContact, the bank's free SMS and e-mail notification service.
• Save
Investments turn interest rate hikes - such as today's - into good news for savers. To get the rate hike to work for you, consider fixed deposit accounts as a way to grow your money.
The Restart Fixed Deposit from Jordaan's bank allows you to restart your investment at the latest rate once during your 13th month investment term, and as the rate goes up, you can reset your Restart Fixed Deposit at the new interest rate and earn more money on your lump sum.
• Borrow
Saying “No!” might be the best thing that your bank could do for you right now!
Now is the best time to reduce your debt. You can do this by changing your spending habits e.g. using your credit card wisely, paying off the full amount outstanding on your credit card each month to save on interest charges.
Avoid borrowing to cover your daily expenses and save to buy big items. Use cash to strengthen your bargaining position at the point of sale, thus saving on interest repayments.
The bank urges borrowers to review their budgets carefully to find sustainable levels of income and expenditure. Financial distress cannot be simply apportioned to excessive credit. Even prudent lenders and borrowers who built in buffers of prime plus 3% - 4% could now find themselves in a challenging position.
Following yesterday's rate announcement, the bank will lift its prime lending rate by 0.5% from 15% to 15.5% with effect from today, Friday 13 June 2008. Interest rates for new and existing FNB home loans will also be increased by 0.5% from today.
The bank revises its savings and investment rates during weekly rates reviews and communicates updated interest rates on its website and in branches.
