Black Friday’s short-term gain could be long-term pain

As Black Friday approaches, guard against getting yourself in the red by impulse buying without a budget or plan the National Financial Ombud (NFO) has warned.

Since Black Friday bargains can easily make you spend more money than you have, it is important that you shop with your head and don’t allow emotions to empty your wallet, says Howard Gabriels, Credit Division Lead Ombud at the NFO.

He urged credit-active South Africans to exercise caution and avoid the financial pitfalls associated with spending on a whim and accumulating debt that lasts beyond the sales season.

“With enticing discounts and limited-time offers on the horizon, many consumers face the risk of accumulating high-interest debt, thus jeopardising their long-term financial goals and well-being.

“Black Friday can be a double-edged sword for those relying on credit to fund purchases because the discounted offers may seem like an opportunity to save, while the financial aftermath can be severe.

“Unplanned, credit-based purchases can quickly escalate into unmanageable debt, affecting people’s ability to save for homes, education, retirement, or even essential emergencies,” said Gabriels.

The NFO advises consumers to protect their financial well-being during Black Friday and to remember the most impactful financial gains come from disciplined spending rather than seasonal discounts.

“Do not end up being a mampara of the Jan-worry month because of impulsive spending in November and December.

“It is imperative that before you think of shopping, you calculate your debt-to-income ratio, taking into account all that you owe, from rent to home loans, credit cards, car payments and other debt payments.

“Also, before diving into the sales, take the time to research products and prices. If a deal seems too good to be true, then it is.

“Familiarise yourself with a retailer’s usual pricing to identify when discounts are genuinely impressive versus when built on inflated prices,” Gabriels said.

Tips for responsible Black Friday spending:
• Set a spending budget: Determine a spending limit based on your current finances and stick to it. Setting a budget minimises the temptation to overspend and helps you focus on priority items.

• Avoid high-interest credit options: If you must use credit, avoid high-interest credit cards or short-term loans that can lead to a cycle of debt. Choose lower-interest options and have a repayment plan in place.

• Prioritise long-term financial goals: Keep your financial goals at the forefront, such as saving for a home, retirement, or children’s education. Weigh the benefits of today’s purchase against tomorrow’s goals.

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• Leave room for emergencies: Ensure you have an emergency fund. Spending all your savings on Black Friday can leave you vulnerable to unexpected expenses, which may result in additional debt.

• Monitor your credit usage: Overusing credit can impact your credit score. Keep credit balances low to maintain your creditworthiness and avoid higher borrowing costs in the future.

Gabriels reminded consumers that the NFO exists to investigate and resolve unresolved credit-related problems between consumers and credit providers (micro-financiers, non-bank credit lenders, banks, clothing and furniture stores, and telecommunication companies).

Consumers may also complain about being declined credit without reasons provided, incorrect credit bureau listings, contractual disputes, reckless lending allegations, disputed fraudulent purchases on accounts, debt prescription disputes, and more.

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