South Africa just saw its biggest interest rate hike in 20 years. Feeling the pinch? Here's how you can save money, quickly and easily.
In July 2022, the South African Reserve Bank increased the repo rate to 5.5% (up 75 basis points) and, by association, the prime lending rate to 9%. This news comes at a tough time for South Africans. While the increase is designed to help manage the punishing month-on-month increases in the cost of fuel, food and just about everything else, the bottom line is that life just got more expensive if you're paying off debt.
The economic reason for the repo rate increase is to help curb rising inflation. Inflation drives the increasing cost of goods and services, and the idea is that if the South African Reserve Bank increases the rate, consumer spending will slow down because everything is more expensive. And that, the theory goes, should bring inflation down.
It seems counterintuitive, particularly since the rise in inflation hasn't been driven by carefree consumer spending. Instead, inflation is up because of rising oil prices that have affected the global food supply and driven up costs.
The interest rate increase means that debt is more expensive — so if you have a loan, your monthly repayments will increase. For example, if you have a Home Loan of R1 million and are paying interest at prime (9%), your monthly instalments will increase by around R476. Similarly, if you are paying off a Vehicle Finance amount of R300,000, you're likely to be debited an extra R100 or so come month end.
Learn more: Variable vs Fixed Interest Rates Explained
While you're unlikely to have any luck renegotiating the interest rate on your bond that's fixed, you can shop around for Vehicle Refinance options or better prices on Car Insurance, Medical Aid, and Funeral Cover. Cheaper isn't always better, but in a world of rising costs, nothing beats value. In the insurance space, that means finding the same (or better) cover and benefits at a lower price than you're currently paying.
Since we're in the comparison business, we did some comparisons of our own. For Car Insurance, we had an independent team do some research into how much money you could save by using Hippo to compare Car Insurance quotes and switch to a policy that offers better value. The result was, on average, a saving of R497* per month — that's R5,964* per year — on the same level of cover.
Read more: The Easy Way to save R5,000 a Year
Let us take care of all the hard work of comparing because nobody has time to look at more than 10 brands while jotting down prices. We'll pull competitive quotes into one place, so you can compare direct prices (you won't find it cheaper!) whenever you need it. It's all online, which means there's no need to be stuck on phone calls – completely free!
Does that sound like a stress-free way to cut back on your monthly expenses for your car at least? Then compare Car Insurance with Hippo.co.za today!
This article is for informational purposes only and should not be construed as financial, legal or medical advice.
*Cumulative monthly savings over 12 months. Based on independent research by Kaufman Levin & Associates, 2021.