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People who open credit facilities over Black Friday tend to spend more

This weekend South African retailers will be offering a range of discounts as part of Black Friday. We hesitate to use the word “sale” as local retailers are often incredibly stingy when it comes to discounts.

However, retailers tend to play on the fear of missing out and as such folks tend to spend more than they should over the Black Friday and Cyber Monday shopping events.

This is according to data studied by TransUnion Africa which found that shoppers who take up lines of credit over Black Friday tend to spend more than shoppers with existing accounts.

Looking at data from November 2020, TransUnion observed that credit card accounts opened in that period spent R28 470 compared to the R18 725 those who had existing accounts spent.

Further more, retail instalment account balances were 59 percent higher in new accounts compared to existing accounts. When it comes to clothing accounts, new account holders spent 192.5 percent more than existing account holders.

While this data is from 2020, TransUnion Africa’s chief executive officer Lee Naik says 2021 won’t see much of a change.

“Despite overall levels of consumer debt remaining high, we’re still anticipating a higher consumption of credit on new facilities compared to existing facilities during the Black Friday period across several credit types. More than ever, South African consumers must be sure they can repay any credit they incur, and lenders need to make informed and responsible lending decisions in granting credit,” says Naik.

That last point about repaying credit is particularly important. TransUnion Africa states that accounts which missed payments and were opened over Black Friday 2020 were slightly higher than accounts opened over the rest of the year.

The graph below shows how missed payments for accounts opened on Black Friday compare to accounts opened throughout the year or as TransUnion refers to them “business as usual” accounts.

So before you open a new credit account this Black Friday, stop and ask yourself if you can afford the expense.

A good place to start is by getting your credit report which you can get from a variety of of outlets. Many outlets offer you one free credit report a year and it’s a good idea to check what you owe before you add more to that figure.

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