South Africa’s rapid induction into the smartphone era over the last ten years has given online credit companies a new playing field in the country’s marketplace. Instead of long queues and complicated applications, people now have easy access to money online, but such access can sometimes do more harm than good. We ask the question: is too much convenience a bad thing sometimes?

Graph showing smartphone penetration (millions) in South Africa 2014 – 2023 projected.
In an effort to prevent people from falling into debt, South Africa’s National Credit Act (2005) was created to protect consumers and make credit and banking services more accessible. However, the rising cost of living in South Africa, coupled with the continued ease of access to quick credit has led many customers into (in many cases) preventable debt as the convenience and low level gate-keeping to credit access should never have been this straightforward.
More recently, leading fintech influencers Wonga have made an attempt to redefine the payday loan and how it can help people. Launched in 2007 in Britain, the payday lender quickly developed a recognisable brand catering to a massive demographic, in the wake of short-term loan controversies and numerous legislation reforms from financial authorities all over the world a much more open and transparent product emerged which is commonly referred to as the instalment loan. Wonga now trades in South Africa as the leading online credit provider for short term periods of up to three months. Its website is an example of transparency at work, as customers can use the site’s slider interface to quickly and easily understand exactly how much they can borrow and how much they will need to pay back over time.
Although redefining the loan as an opportunity to get easy credit in a sustainable and honest way can only be a good thing, it is vital to remember that such credit is designed to be for once-off situations when the need is great. When it comes to daily living, relying on payday loans is never the answer, the goal of any financial institution should be to educate their consumers to the point where they no longer rely on your service.
Budgeting for emergencies – financial education.
Even if you’re the kind of person who budgets for emergencies, there may come a time when your emergency fund is not enough (depending on the size of said emergency) You may find that you need to borrow money fast despite your best planning. In such situations, it’s possible that short term credit is a viable solution when compared to overdraft fees or credit card defaultment, check this with your bank of course first to determine your best course of action.
Never borrow money if you are unsure of your ability to pay it back on time, as this can lead to heavy costs and can in rare cases still lead to the classic and dreaded debt spiral. Use a loan calculator to work out how much you will need to pay back and when, and then factor it into your budget. If you factor your repayments into your budgeting plan, you should be able to pay off your loan on time and resume life as normal.