The reduced interest rates and reduced cost of credit gives consumers an opportunity to better manage their money by making smart decisions on credit.
Yogesh Borkar, Head of Credit at First National Bank says, “in the last year, consumers who have obtained credit that is linked to variable interest rates have benefitted from consistent rate cuts. While indication is that the rate cut cycle may be coming to an end, the cost of credit has reduced and those who have managed their credit responsibly have better opportunities to unlock value to get the most suitable credit for their needs.”
The view is further echoed by Yogesh, explaining that consumers who have a good credit history have more options to get the most suitable credit. This is very important, because these consumers have several types of credit to choose from, depending on the need. In addition to this, consumers who have not maintained their credit obligation have a chance to use the reduced interest rates to improve their prospects, he says.
Yogesh shares the following tips to help you boost your prospects of getting the most suitable credit for your needs:
1. Stay committed to your current credit obligations
It is always beneficial to make regular payments for all your credit obligations and if you’re unable to pay the amounts due on your accounts in full, pre-arrange with your credit provider for alternative payment measures. If you keep up with your payments, it becomes easy for a credit provider to re-evaluate your interest rate since you’ve proven to responsibly manage your credit.
2. Do not reverse authorised debit orders
Reversing your authorised debit orders will negatively impact your account and credit history, which may affect your ability to get credit. Always allow your debit orders to go through as planned.
3. Have enough funds to avoid unnecessary penalties
Align your debit orders with your salary date. This will ensure that your credit commitments such as funeral cover, loans or credit cards are paid as you get paid. In the event that the transaction is declined because of insufficient funds, you will be held liable to pay a penalty fee which will have a negative impact on your credit history.
4. Pay more than your minimum payment
The minimum monthly payment listed on your statement is the lowest amount you can pay on your account to remain in good standing with your credit commitments. Strive to pay any amount more than the monthly minimum even by GHS50 depending on the amount of the debt, but only if you can. If you keep it up, you’ll lower the long-term cost of your debt.
5. Make sure you have savings for a rainy day
The response to the COVID-19 pandemic has taught many of us about the importance of having emergency savings for a rainy day. The conversation of saving can be intimidating and often customers are strapped for cash and don’t have the means to save large amounts of money. Consider starting small by activating bank-your-change on your account on the First National Bank App – it automatically helps you save as you swipe your card on your everyday purchases and rounds off to the nearest Cedi. Come year-end you would have built up an impressive balance. Having additional funds, will improve your financial position, putting you in good standing for lending.
6. Track your spending
You can track your spending habits on your own to understand if you will make it for the month, view your credit status and save smart. When you track your spending, you know where your money goes, and you can ensure that your money is used wisely.
“First National Bank is constantly working to ensure that we ease your customers’ financial burdens by supporting them through simple, cost-effective financial solutions that give them value, including a broad range of safe and secure banking channels to help them manage their money. Incremental changes in money management behavior can help consumers to maximise the potential of credit solutions. We are committed to providing customers with the right credit solution to meet their individual and/or family needs. Furthermore, customers have several channels they can use to take up the right credit anywhere, anytime,” concludes Yogesh.