How over-indebted consumers can make the most of rate cut

Desperate an over-indebted consumers could at last breathe a sigh of relief on Thursday when the Reserve Bank cut the repo rate by 25 basis points.

This decrease after more than a year of a constant repo rate of 8.25% was hopefully the first in a series of cuts.

This repo rate cut will put a little more money in consumes' pockets and give South Africans a chance to increase their savings and strengthen their personal finances, says Subash Chatrooghoon, an accredited financial advisor at Liberty.

Economists also indicate that a further cut in the prime lending rate could occur before the end of the year, further boosting consumers' disposable income or ability to save.

"The prime lending rate was reduced to 7% during the Covid pandemic to assist South Africans facing financial hardship.

In November 2021, the Reserve Bank started to increase the repo rate, with the prime lending rate peaking at 11.75% in May 2023 and remaining there since.