Capitec just announced a 100% refund on interest for payment holidays – and you can still apply
- Banks have rescheduled billions in debt payments during the coronavirus disaster – but have been very clear that a holiday is not a freebie, and interest will continue to accumulate on loans.
- On Monday Capitec broke ranks, announcing a 100% refund on interest it charges during a payment holiday of up to three months.
- The catch: clients have to make good on their payments for a year to qualify for the full refund.
- Applications to reschedule loans, and so benefit from an interest-free payment break, are still open until the end of June.
- For more stories go to www.BusinessInsider.co.za.
Capitec is offering its clients a 100% refund in the interest charged during the first three months of Covid-19 payment holidays, it announced on Monday – eventually – in a break with its industry peers.
And you still have until the end of June to apply for such a free break in debt repayments.
South African banks have rescheduled loan payments worth billions for their clients, with temporary debt relief through such payment holidays completely outstripping a government-backed loan scheme that was supposed to help smaller businesses with their cashflow during the coronavirus disaster.
"We were very clear from the outset that fees and interest will still accrue," said Banking Association of SA (Basa) MD Bongiwe Kunene last week of such debt rescheduling. "We were quite up-front that this is not a debt write-off. it is leniency of debt payments."
But on Monday Capitec said that, while it will charge interest during payment holidays, it would also be repaying that interest for up to three months – on all agreements.
"The interest refund will be available to all clients who have taken up Capitec’s Covid-19 payment break or rescheduling relief plan between 27 March and 30 June 2020," the bank said in a statement.
The catch: once the payment holiday ends, clients have to keep up their repayments for a full year to qualify.
The repayment is only valid for the first three months of any repayment holiday, no matter how long that holiday is. After it ends, clients must make all of their debt repayment for six months before 50% of the interest charged during the first three months of a payment holiday is refunded, by credit to the loan account. After another six months of payments, the remaining 50% will be refunded.
The sums involved could be substantial, depending on the customer. A R100,000 loan at 18% would cost R4,568 in interest over three months, Capitec said by way of example. That amounts to some 4.6% of the total loan value.
(Compiled by Phillip de Wet)
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