Durban - Generation-Z consumers (those born after 1995), are already actively involved in the credit market.
In the case of an emerging economy like South Africa, less than half of the Gen-Z population is credit active, according to a report by TransUnion.
Just five percent of Gen-Z consumers in the country have credit cards. This represents untapped growth potential and opportunities for credit providers to educate Gen-Z consumers about responsible lending before they enter the credit market.
Store cards issued by retailers and retail credit specialists are also entry points for consumers to the credit market, however, only six in 10 credit-active Gen Z consumers in South Africa have a clothing account.
According to the TransUnion report, Gen-Z consumers that are active in the credit market hold credit products such as clothing loans, bank loans, non-bank loans and bank credit cards.
Before participating in the credit market or holding any product such as a bank loan or a credit card, Gen-Z consumers need to know what they are getting involved with.
Samir Ghrib, chief risk officer at RCS offers tips for Gen-Z consumers before they enter the credit market:
Pay your bills on time
Paying your credit instalments on time can have a significant impact on your credit record.
People can ensure that credit bills are paid on time by setting up a monthly debit order system that automatically deducts your monthly expenses at the end of month. Trying to pay a little more than the minimum amount will also provide some breathing room for a rainy day.
Think before applying
Making multiple applications for credit lines in a short period of time can lower your credit score. Before applying for credit, you need to look at your credit options and decide if you can afford to take on a new account.
You also need to be careful of the different credit providers that approach you and use good judgement to decide which provider to go with.
Be proactive
Being proactive means that if you are unable to pay a monthly instalment that is due, you will contact the creditor to contact you instead of creditor contacting you.
By contacting the creditor, you can discuss a payment arrangement as well as prevent the negative impact that non-payments will have on your credit score.
Ghrib said, “Now is the time to adapt to meet consumer needs and to prepare the Gen-Z generation to use credit responsibly.”
“Ultimately, the principle that we need to instil in Gen-Zers is to practice borrowing within their means by ensuring that credit instalments are paid consistently and in full and using a budget to determine how much credit they can afford,” Ghrib said.
IOL Business