New Interest Rates Published
Credit Fees & Rates Regulations Published
Dr Rob Davies, the Minister of Trade and Industry has finally published the new limitations of Fees and Interest Rates regulations in the Government Gazette.
The Fees limits and new way to work out the maximum interest rates which can be charged on credit were published on the 6th of November after having been finally signed off by the Minister on the 21st of October.
Wait For It
The DTI published a notice back in June 2015 in regard to changing the way that interest rates are worked out. The regulations are slated to come into effect 6 months after the date of final publication in the Gazette. So do not start to complain if you see that your account (or your clients) doesn’t reflect this rate just yet.
What the New Maximum Interest Rate Limits Look Like
Mortgages (bonds):
Repo Rate + 12% (per annum)
Credit Facilities
Repo Rate + 14% (per annum)
Unsecured Credit
Unsecured CreditRepo Rate + 21%
Incidental credit sits at 2% per month.
Maximum Initiation Fees
A lot of people neglect the fact that when they take out credit the creditor can charge them a once off fee called an initiation fee. This should in theory cover costs associated with providing credit (such as staff and doing credit checks and affordability assessments…and profit).
Mortgages (bonds):
R1100 Plus 10% of the amount in excess of R10 000.
Maximum charge never to be more than R5250
Credit Facilities
R165 Plus 10% of the amount in excess of R1 000.
Maximum charge never to be more than R1050
Unsecured Credit
R165 Plus 10% of the amount in excess of R1 000.
Maximum charge never to be more than R1050
MFSA Got Their Way
It seems that the spark that lit the fire (which was when MFSA took the matter to court to compel the government to review the fee structure as per the requirements of the law) got attention as well. Monthly account fees are now increased to R60 (up from R50). Seeing how the rates for unsecured credit have been effected however it may be more of a sting than a blessing to their members.
Download for your Records
Gov Gazette Max Interest Rate and Fee published 2015 in effect 2016