As we near the end of the month, consumers are being urged to avoid defaulting on mandatory debit order payments.
The number of customers who do this often spikes between December and January, noted Ryan Prozesky, the CEO of FNB's consumer core banking.
"Although consumers do deserve to celebrate at the end of the year and spend quality time with friends and family, they should be careful not to spend haphazardly at the expense of important financial obligations," said Prozesky.
Here are five risks of skipping debit order payments:
1. Unnecessary debt
The last thing you want at the beginning of the year is to be indebted due to poor planning. Consumers often find themselves having to take out loans or borrow from friends and family to meet financial obligations in January.
2. Double debit orders
Service providers will often attempt to debit double the amount due if you skip a payment due to insufficient funds in your account. For example, if a debit order for R2,000 fails during December, you could pay R4,000 in January.
3. Policies lapsing
If your insurance policy debit order fails for two consecutive months, between December and January, you face the risk of your policy lapsing. This can place you at risk should an unfortunate event occur while you are not insured.
4. Bad credit record
Consecutive debt order bounces, as well as lapsed policies as a result of nonpayment, could impact your credit record. This can work against you when applying for credit from financial services providers.
5. Catching up may take time
Where home loan payments are concerned, for example, it can take up to four months to catch up on one missed payment. This may delay other financial goals one has. There are also interest rates to consider, which might impact further on the delay.
"Making debit order payments a priority when planning your budget for the festive season can go a long way to ensuring that you start the New Year stress free," said Prozesky.
This is because there are also a number of things you have to buy in January that can set you back financially, such as transport costs, back-to school-expenses and food.