Debt relief - What is your bank offering?

Going through a financial crisis is stressful, whether it be as a result of losing your job, being short-paid, having to fork out towards an emergency payment, or finding yourself in the midst of a global pandemic. This is especially taxing if you have a debt to service.

It is against this backdrop that banks are increasingly offering payment holidays. Justmoney looks at the various debt relief options available to you from the big five banks.

Tip: To compare bank account offerings and ensure you’re making the best and most affordable decision, click here.

Standard Bank: Standard Bank customers are being offered a break from their debt repayments on a credit agreement for a period of one to three months. During this time, consumers are encouraged to use the money they’re saving to sort out any other credit commitments or pay unexpected potential medical expenses.

The bank did however stress that payment holidays are only available in exceptional circumstances - a pandemic being one of them.

Standard Bank clients who are interested in this option are encouraged to get in touch with the Debt Care Centre.

In addition, the bank has set up a personal loan instalment relief for small to medium enterprises (SME’s), as well as loans for customers earning less than R7,500 a month.

First National bank (FNB): Similarly to Standard Bank, FNB has extended payment holidays to all of their credit-active customers, whether it be an individual or a business.

Through this scheme, customers are given an extension on their repayments for up to three months. This is with the intention of offering much-needed cash relief, says FNB chief executive, Jacques Celliers.

“Our approach is to offer qualifying customers a payment break by paying instalments on their behalf for a period of three months. As a result, we’ve structured our assistance at prime interest rates to alleviate the financial burden and give customers the flexibility to repay the facility over flexible terms.

“Similarly, we continue to scale our support for businesses to help them manage the immediate impact of the lockdown. We’ll also support businesses beyond the lockdown through the Covid-19 Loan Scheme that was recently announced by the Government,” adds Celliers.

The bank has also made a toolkit with financial advice and tools available to businesses.

Interested FNB clients are encouraged to contact the bank for more information by clicking here.

Absa: “The Covid-19 pandemic has resulted in a worldwide economic downturn and a complete lockdown in South Africa. Businesses and individuals are being impacted financially both locally and globally. Therefore, it’s our duty to offer as much relief and assistance as we can to our customers during this unprecedented outbreak,” says Absa.

The bank has created an extensive payment relief plan to minimise the financial impact of the pandemic.

For retail customers, the plan applies to the following credit products - home loans, personal loans, credit cards, student loans, and vehicle loans.

“Loan instalments, interest and fees will accrue monthly and will be capitalised into your loan account, but loan terms and repayments will be adjusted to help you cope during this difficult period,” adds Absa.

Corporate and business customers will also receive tailored options when it comes to loans, mortgaged business loans, and commercial asset finance products.

“Our plan doesn’t carry any extra fees or costs. It’s aimed solely at helping our customers who are struggling with cash flow due to the Covid-19 pandemic,” Absa states.

For further information, Absa clients are encouraged to visit their website.

Nedbank: “We’re specifically looking at ways in which we can address the heightened anxiety of our clients as a result of this pandemic, and the negative impact it has had or may have on their finances. We encourage clients who are experiencing cashflow difficulties to contact us,” says Nedbank.

Nedbank’s relief programme includes entering payment arrangement options that are tailored to suit you based on your household’s cash flow being negatively impacted at this time.

These options, according to Nedbank, include:

• Payment holidays – a temporary suspension of your monthly repayment based on your household’s cashflow being negatively impacted and you being unable to service any of your debts.
• Restructuring – rearrangement of the current monthly repayment schedule, which may result in an extension of the original loan term.

“Each case will be reviewed individually, and the most appropriate solution recommended. It’s important to note that there remains an obligation on you to pay your loan agreements. The above solutions don’t result in a reduction in your overall obligation to service your debt,” Nedbank adds.

For more information click here.

Capitec: “Rescheduling means extending your loan payment period, increasing the number of monthly repayments and in this way decreasing your monthly repayment amount. Visit your nearest Capitec Bank branch and ask us about rescheduling your loan and whether you qualify,” says Capitec.

This free service allows you to postpone your repayments for a period of one to three months.

“Remember, even though you'll end up paying less per month and have more money to spend, you'll be paying more for the total loan amount because you’ll be paying more interest,” adds Capitec.

Alternative options

A payment holiday is not your only option during this time. If you find that you’re struggling with affording and managing your debt, consider debt consolidation or debt counselling.

Here you’re given instant cash relief as your debt repayments are consolidated into a single reduced amount. Other benefits include legal asset protection so that your assets can’t be repossessed, negotiation with your creditors so you no longer have to deal with them, budgeting assistance, and a tailored restructuring debt repayment plan.

For more information and assistance with servicing your debt, click here.