Money and Markets

How much more you’ll pay on credit cards, loans, and your bond after the rate increase

Business Insider SA

  • The Reserve Bank's Monetary Policy Committee announced a big-jump 75 basis points increase in interest rates on Thursday.
  • South Africa is seeing very high rates of inflation, which the Reserve Bank is supposed to control.
  • The interest rate increase will take money out of consumer pockets – at a rate of R1,670 per month for a R1 million home loan, compared to a year ago.
  • Here is how much the rate increase will cost on cars, credit card debt, and personal loans.
  • For more stories go to

The SA Reserve Bank's Monetary Policy Committee on Thursday hiked interest rates by 75 basis points, adding three quarters of a percentage point to what just about everyone pays on their debt.

The big-jump increase in rates – the biggest single increase in interest rates since 2002 – comes just after Statistics South Africa announced the highest rate of consumer inflation South Africa has recorded in 13 years.

Private transport costs were up 37% compared to a year ago, and food prices have increased by more than 9%, said StatsSA.

See also | Inflation is rocketing – especially if you eat bread or drive a car

And inflation isn't likely to slow, said Reserve Bank governor Lesetja Kganyago on Thursday.

To force prices down, the Reserve Bank is now taking money out of consumer pockets, by way of higher interest payments.

The prime interest rate is now at 9%, a level last in 2020, before sharp cuts were made to stimulate the economy – and keep businesses afloat – during the pandemic. 

See also on Fin24 | Interest rates increased by 75bps - biggest hike since 2002

Here's how much the interest rate increase will cost you in rand terms compared to a year ago, based on the average costs of homes and cars, average short-term borrowing, and typical or maximum interest rates.

On a R1 million home loan: R1,670 per month

Average sectional title homes sell for a bit under R1 million, and average freehold houses sell for somewhat more than R1 million in South Africa.

Call it about R1 million in debt to buy a home, and that now costs an extra R1,670 per month compared to July 2021, if you are paying the predominant (or prime) rate.

First-time buyers and those who have to stretch farther to afford a home tend to pay above prime, while those in better financial shape can get rates at below prime, so the impact of an interest rate increase is predominantly felt by the less-than-rich.

On a R375,000 second-hand car: R625 per month 

South Africans paid about R375,000 for pre-owned cars in 2021, on average.

Interest rates on cars differ wildly, with heavy finance subsidies by some high-end brands on new vehicles – and a range of residual or balloon options that keep down monthly payments while shifting cost to the end of the loan period.

But for a second-hand car that will hold its value well, for a buyer with a decent level of free monthly cash relative to the value of the car, a rate of prime plus two percentage points isn't bad.

For such a buyer, the same car loan is now R625 per month more expensive than it was one year ago. 

On R50,000 of credit and store card debt: R80 per month

Between credit cards and store cards, South Africans have about R50,000 in unsecured debt, according to the National Credit Regulator.

Banks often offer personalised interest rates on credit card debts, while retailers with own-brand cards are more likely to charge flat – and relatively high – rates of interest.

At the highest rate of interest allowed, set at the repo rate plus 14 percentage points, that average R50,000 of unsecured credit is now just about R80 per month more expensive than it was in July 2021.

On a R33,000 personal loan: R55 per month

Credit bureau data shows the average new personal loan in South Africa is just about R33,000.

The maximum interest rate allowed for such loans is the repo rate plus 21 percentage points.

Base on those numbers, the cost of credit every month is up R55 compared to a year ago. 

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