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  1. #1
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    Default Rate hike , a touchy subject

    There is talk that the Reserve bank is planning on a rate hike . Yes this is not good news , but what can you do about it , basically nothing , you just pay more and have less money to spend .
    I suppose its a big deal for those with big debt, but in reality what can you do , the bank ups its rate and you pay more, there is no real option to discuss to situation with them , and say that you did not agree to the rate change . Yes I am aware one can opt to fix the rate , but in most cases this is quite high , and riding the fluctuation wave is maybe the best .
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    Default Re: Rate hike , a touchy subject

    It is a mixed "blessing" situation.
    You will earn more interest on some or all of your money type investments (savings, call account, term account deposits, etc.
    However you will pay more on any interest bearing debt if you have any.
    Also increased rates tend to somewhat depress investment values where they are linked to stocks / shares etc. as well as the gold price and such.

    Sometimes better to fix rates - depends on your situation either way.
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  3. #3
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    Default Re: Rate hike , a touchy subject

    Quote Originally Posted by NEON DEON View Post
    There is talk that the Reserve bank is planning on a rate hike . Yes this is not good news , but what can you do about it , basically nothing , you just pay more and have less money to spend .
    I suppose its a big deal for those with big debt, but in reality what can you do , the bank ups its rate and you pay more, there is no real option to discuss to situation with them , and say that you did not agree to the rate change . Yes I am aware one can opt to fix the rate , but in most cases this is quite high , and riding the fluctuation wave is maybe the best .
    we are not in isolation so with the rest of the world starting to increase rates the RB has no real option but to follow suit
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  5. #4
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    Default Re: Rate hike , a touchy subject

    My parents are happy, I am not thrilled.
    Dont take anything I say as actual advice or fact. I dont.

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  7. #5
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    Default Re: Rate hike , a touchy subject

    So glad I am debt free, and have a few randelas in the bank earning me interest.

    But ja it will hit some people hard.
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  9. #6
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    Default Re: Rate hike , a touchy subject

    I would rather take a couple of hits now and let my RA's and investments grow better.

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  11. #7
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    Default Re: Rate hike , a touchy subject

    Necessary to keep inflation in check
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  13. #8
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    Default Re: Rate hike , a touchy subject

    100% to keep spending and debt in check.

    We are one of the worst debt defaulting nations in the world. South Africans debt problem is out of control, and its not good debt, like homes education etc, its bad debt, like credit cards and cars.

    People spend everything they have, and borrow more to spend on stuff they dont need, while not saving a cent for pension or reinvesting.

    Its a bloody difficult situation for those who use debt responsibly, but its needed for the irresponsible.

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    Default Re: Rate hike , a touchy subject

    Quote Originally Posted by JadeDsantos View Post
    100% to keep spending and debt in check.

    We are one of the worst debt defaulting nations in the world. South Africans debt problem is out of control, and its not good debt, like homes education etc, its bad debt, like credit cards and cars.

    People spend everything they have, and borrow more to spend on stuff they dont need, while not saving a cent for pension or reinvesting.

    Its a bloody difficult situation for those who use debt responsibly, but its needed for the irresponsible.
    Add to this our legislation and courts heavily favour the debtor and we are heading for serious problems

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    Default Re: Rate hike , a touchy subject

    Quote Originally Posted by Half-Pint View Post
    Add to this our legislation and courts heavily favour the debtor and we are heading for serious problems
    100%, people loosing their homes, cars etc. All because they didnt understand, or were under sold the responsibility for paying debt.

    I know some of people who thought they were smart by rolling credit cards, all the time. And as you need to pay off one debt with another, you usually go to worst and worst places to get the cash, next thing you have signed off your payslip, and guys starting to knock on your door taking random things in your house and at worst, taking a finger or two.

  18. #11
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    Default Re: Rate hike , a touchy subject

    I still don't see how, in this country, increasing interest rates will reduce inflation.

    How will that reduce fuel costs

    How will that reduce electricity costs

    How will that reduce food costs due to above

    How will that reduce above inflation government spending/borrowing

    This are the inflationary issues which are driving this economy, not wild individual spending.

    Yes, many in this country are borrowing when they should not. But that is a financial education problem, not one that can we solved with rates unless we make BIG rate changes. Which will then cool the already ice cold economy.
    Last edited by Quiksilver; 2022/01/25 at 11:00 AM.
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  20. #12
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    Default Re: Rate hike , a touchy subject

    Quote Originally Posted by Quiksilver View Post
    I still don't see how, in this country, increasing interest rates will reduce inflation.

    How will that reduce fuel costs

    How will that reduce electricity costs

    How will that reduce food costs due to above

    How will that reduce above inflation government spending

    This are the inflationary issues which are driving this economy, not wild spending.

    Yes, many in this country are borrowing when they should not. But that is a financial education problem, not one that can we solved with rates unless we make BIG rate changes. WHich will then cool the already ice cold economy.
    Less money in circulation, less money to spend, less money to take from consumers. Retailers will try maintain volume by keeping costs stable / reducing costs. Its very hard to go backwards, but it needs to slow down the increasing inflation.

    its a just corporate greed vs consumers wants (and needs in a lot of people lives which is also the sad part. Its more expensive to get a home, not a better home, just a home, or a car, not the top of the line beemer, just transport)

    Persoanlly, if it stops the climbing costs of land cruisers, I will be happy.

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  22. #13
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    Default Re: Rate hike , a touchy subject

    Quote Originally Posted by JadeDsantos View Post
    100% to keep spending and debt in check.

    We are one of the worst debt defaulting nations in the world. South Africans debt problem is out of control, and its not good debt, like homes education etc, its bad debt, like credit cards and cars.

    People spend everything they have, and borrow more to spend on stuff they dont need, while not saving a cent for pension or reinvesting.

    Its a bloody difficult situation for those who use debt responsibly, but its needed for the irresponsible.
    I agree completely.

    I think banks are also to blame for this problem. They dish out "bad debt" like it is Smarties. They dish out credit cards with huge limits. So if you do not have self discipline, you very easily overspend. Some people think that they have to use it to the max and then they fall into the cycle of only paying the minimum payment ending up with a huge interest every month.

    The other example is the endless extension (72 months?) of car dept and balloon payments. People do not realise, that if they use that, they cannot actually afford the vehicle. As far as I am concerned, if you cannot pay it off in 48 months, you cannot afford it.

    Sadly a lot of consumers fall in the trap set by the banks.

    Bostoe

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  24. #14
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    Default Re: Rate hike , a touchy subject

    Quote Originally Posted by JadeDsantos View Post
    100% to keep spending and debt in check.

    We are one of the worst debt defaulting nations in the world. South Africans debt problem is out of control, and its not good debt, like homes education etc, its bad debt, like credit cards and cars.

    People spend everything they have, and borrow more to spend on stuff they dont need, while not saving a cent for pension or reinvesting.

    Its a bloody difficult situation for those who use debt responsibly, but its needed for the irresponsible.
    we had urgent some work that we needed get out before shutdown requiring quite a bit of overtime, problem is payroll was already closed so I offered to the guys that we pay out the overtime early in January so they have bucks when they come back from leave, virtually all of them refused to work if they could not get their money before going on holiday, money they did not expect to get that could plug some holes in January but they'd rather use it as holiday spending money than school or stationery money

    As a country we have no idea how to work with money and only concerned about today's problems and not tomorrow's. Best thing you can teach your kids is how to work with money.
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  26. #15
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    Default Re: Rate hike , a touchy subject

    Quote Originally Posted by JadeDsantos View Post
    Less money in circulation, less money to spend, less money to take from consumers. Retailers will try maintain volume by keeping costs stable / reducing costs. Its very hard to go backwards, but it needs to slow down the increasing inflation.

    its a just corporate greed vs consumers wants (and needs in a lot of people lives which is also the sad part. Its more expensive to get a home, not a better home, just a home, or a car, not the top of the line beemer, just transport)

    Persoanlly, if it stops the climbing costs of land cruisers, I will be happy.
    Even less growth

    Even less employment

    Even more social grants

    Your last line sums up the fallacy. "Consumers" in this country only make up 3% of the population.

    Agree that the banks/brokers/lenders do seem to lend at very high rates. But then how does increasing it more help?

    If I'm a person who is borrowing money already at 23% interest. How does making it 24% help my situation.

    If i'm a person who is thinking of borrowing money at 23%, do you think making it 24% will stop me?

    All the things that are driving inflation are things that people (the other 97%) NEED to live. Not nice to haves.
    Last edited by Quiksilver; 2022/01/25 at 11:16 AM.
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  28. #16
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    Default Re: Rate hike , a touchy subject

    Quote Originally Posted by bostoe View Post
    I agree completely.

    I think banks are also to blame for this problem. They dish out "bad debt" like it is Smarties. They dish out credit cards with huge limits. So if you do not have self discipline, you very easily overspend. Some people think that they have to use it to the max and then they fall into the cycle of only paying the minimum payment ending up with a huge interest every month.

    The other example is the endless extension (72 months?) of car dept and balloon payments. People do not realise, that if they use that, they cannot actually afford the vehicle. As far as I am concerned, if you cannot pay it off in 48 months, you cannot afford it.

    Sadly a lot of consumers fall in the trap set by the banks.

    Bostoe
    Banks are totally to blame. Pay day loans was one of the biggest fuck ups I have ever seen. It took advantage of the poor and needy, dangling a life they saw on instagram in from of them and they bite hook line and sinker.

    I have had two or three fights with banks recently, with loans to say either go on holiday, or buy something you dont need, its nonsense. People struggle to get house finance sorted, but I will give you a huge overdraft or loan for some retail spending? Unsecured. Its nonsense. Its predatory. Its going to be the bain of this country.

    Look at Americas student debt, and combined with the housing and retail spending, its heading for a cliff.

  29. #17
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    Default Re: Rate hike , a touchy subject

    Quote Originally Posted by JadeDsantos View Post
    Banks are totally to blame. Pay day loans was one of the biggest fuck ups I have ever seen. It took advantage of the poor and needy, dangling a life they saw on instagram in from of them and they bite hook line and sinker.

    I have had two or three fights with banks recently, with loans to say either go on holiday, or buy something you dont need, its nonsense. People struggle to get house finance sorted, but I will give you a huge overdraft or loan for some retail spending? Unsecured. Its nonsense. Its predatory. Its going to be the bain of this country.

    Look at Americas student debt, and combined with the housing and retail spending, its heading for a cliff.
    This I agree with - but it wont be fixed by the base interest rate.
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  31. #18
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    Default Re: Rate hike , a touchy subject

    I predict 2022 not going to be a good year for the finance.

    USA (+ world) raising inflation, US stock market bubble, High energy prices, supply chain issues (impact on production), China debt plus nervousness of a conflict in Ukraine & Taiwan.
    Last edited by HannesS; 2022/01/25 at 11:28 AM.

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  33. #19
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    Default Re: Rate hike , a touchy subject

    Quote Originally Posted by Quiksilver View Post
    Even less growth

    Even less employment

    Even more social grants

    Your last line sums up the fallacy. "Consumers" in this country only make up 3% of the population.

    Agree that the banks/brokers/lenders do seem to lend at very high rates. But then how does increasing it more help?

    If I'm a person who is borrowing money already at 23% interest. How does making it 24% help my situation.

    If i'm a person who is thinking of borrowing money at 23%, do you think making it 24% will stop me?

    All the things that are driving inflation are things that people (the other 97%) NEED to live. Not nice to haves.
    You are a person who wants to borrow money to buy a new pair of sneakers by Kanye West, usually you cant afford it, so you dont get it, not I have access to cheap loans, so hell, why not spoil myself and buy them. I wasnt thinking of getting a new car, but I really like that new beemer, I see I can get a cheap loan from X, so ja, why not, you only live once.

    The above is the issue.

    The challenge is that we cant have inflation in non essential goods and seperate that from essential goods. Corporates see that consumers have more money, and therefore act in their best interests. Its a blanket effect on a great economy.

    I get what you are saying, how does 1% make that difference, but it does. Hence the hike.

    The challenge is, is we could get a discounted rate for homeloans, and education, and not general spending for cash loans, it might be different, but I dont think we ever could.
    Last edited by JadeDsantos; 2022/01/25 at 11:28 AM.

  34. #20
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    Default Re: Rate hike , a touchy subject

    Quote Originally Posted by JadeDsantos View Post
    Less money in circulation, less money to spend, less money to take from consumers. Retailers will try maintain volume by keeping costs stable / reducing costs. Its very hard to go backwards, but it needs to slow down the increasing inflation.

    its a just corporate greed vs consumers wants (and needs in a lot of people lives which is also the sad part. Its more expensive to get a home, not a better home, just a home, or a car, not the top of the line beemer, just transport)

    Persoanlly, if it stops the climbing costs of land cruisers, I will be happy.
    Sure, this will have an effect on inflation but the issue with SA is that current inflation is heavily affected from the supply side to which interest rate changes will have little impact. Ultimately the SARB's MPC is trying to correct for fiscal failures, again hitting the consumer (especially low-to middle income classes) the hardest. Yes, demand pull inflation is present currently due to lower rates since lockdown but probably counteracted by thousands of jobs lost on the other end.

    It all comes down to government, corruption and the resultant lack of proper fiscal policy over the past 20 odd years.
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