FICA Who?

There are a few terms in the financial world that inspire that deep sense of frustration – one such term is FICA. If you want to open a bank account, get a personal loan, get loan approval or settle your debt you will need to be FICA’ed – and probably more than once.

Like other 4-letter words starting with “F”, FICA is not something we like to mention in polite terms. Basically, it’s the method used by financial institutions in South Africa to ensure the person, or people, attempting to do anything involving money are who they claim to be. It generally involves supplying 3 months of bank statements, a copy of your ID and a proof of residence.

Now, most of those things seem simple enough to get – especially in the days when banks used to send you bank statements in the mail. Or when you used to receive bills in the post. But the world has moved on from hard-copy documents. Most of our bills come via the internet – you even get your Clicks Club rewards online now.

Then there are these elusive bank statements. Banks don’t send us statements anymore. Instead, we get emailed “links” to our history online. But you can’t just print that out – you need a certified statement from your bank and that means a trip to your local branch.

Not all is lost though! There are new technologies starting to come to the fore in the internet loan world. Now you don’t need 3 months bank statements printed out and stamped with that ugly blue mark the banks love. All you do is plug your online banking credentials into a program – using the same security measures as normal online banking procedures use – and hey presto, statements were done.

This not only makes for fast loans but also allows for you to get a complete and free credit report. This means that you now know your credit status before you even take out a loan. This helps you make an informed decision on how much money you want to borrow and what interest rate won’t leave you struggling for months to come.

FICA is an unfortunate, necessary evil. It might keep those dodgy money launders at bay but it also adds a layer of frustration to everything financial. So next time you need to get a personal loan you should check out the options online that streamline the process and stop you using that other four-lettered “F” word.

The Crazy Credit Costs

We’ve all heard the story about ensuring we get a credit history so we grow our credit status with the banks. It’s the only way to get a loan after all. However, how many of us truly know what kind of expenses we are incurring each and every month while we try to show the credit bureau we are “creditworthy” people?

Interest Rates

Credit card interest rates are simply scary. There’s no way around it – if you’re late then it’s going to cost you. A lot. Most credit cards will give you 30 or even 60 days interest-free on your credit card, but the problem comes when you haven’t paid the money back at the end of that allotted time. The bank can charge you somewhere in the region of 25-30% on any outstanding amount left unpaid. Consider how much your new TV would cost if you added 25% to the cost every month – you could end up paying for the TV twice before you were done!

Bank Costs

When it comes to admin fees, banks are the best in the business. There is almost nothing you can do at a bank without incurring some cost or another. Credit cards are especially handy when it comes to tacking on admin fees. Banks are allowed to charge up to R150 initiation fee just to get you in the door. Shop around before committing to any credit card – you might be able to save yourself a few bucks!

Insurance

The bank needs some insurance against the unlikely event that you die before you finish paying off your debts. This insurance ends up being covered by the consumer. Always read the fine print when accepting a credit card – make sure you know exactly what you’re paying for each month.

Penalties

The bank is allowed to charge you a penalty fee if you exceed the limit on your credit card or are late in making payment. Always know what your credit limit is before swiping your card. You could end up paying more than you expected!