FNB launches new credit accounts – including for those looking to build a credit record
Banking group FNB has announced new products, which it says will help South Africans get access to credit.
The new products are aimed at first-time credit holders, middle-income banking clients who only want a credit account, and small and medium businesses suffering from the various black swan events hitting the country.
The first credit product is a new FNB Fusion account that will offer a starting credit limit of R1,000. FNB said this account will allow customers to “start their credit journey” and build up their credit record.
“This is critical in allowing them to build up an understanding of how to manage credit and then build the credit profile that gives them access to other credit solutions in the future, based on their needs,” the bank said.
The transactional account will offer day-to-day banking and has a credit facility for emergencies, unplanned life events, or getting clients through the end of a financially tough month to cover bills with zero interest for 30 days.
Customers can also earn eBucks and have access to credit card equivalent benefits, such as travel insurance, it said.
The second new service is a standalone Aspire credit card.
The standalone credit account will allow customers to earn eBucks rewards and access SLOW Lounges, as well as create a virtual card that is safely stored on the FNB App.
The credit account will cost R42 a month, and targets middle-income customers.
Finally, FNB said that it is on track to fund R1 billion in Bounce Back Loans to small and medium businesses by May 2023.
The Bounce Back Loan has a government guarantee and low interest rates, and has been offered to businesses affected by the Covid-19 lockdown, social unrest, and floods in parts of the country.
“To date, FNB has extended nearly R900 million in Bounce Back Loans. Of this, R262 million has been towards funding Women In Business,” it said.
FNB CEO Jacques Cilliers said that the bank is also helping first-time home buyers with improved affordability and access to government-backed mortgage solutions.
The bank is also continuing to leverage its digital and online banking platforms to make this access to financing as easy as possible, he said, noting that has had 32 million pre-approved offers on its digital platforms in January alone, and 80% of all pre-approved loans are paid out to customers within 10 minutes.
Red flags
While easier access to credit will be welcomed by cash-strapped South Africans looking for ways to get through the month, debt councillors and industry credit reports have painted a worrying picture for consumers in South Africa, warning of a potential debt spiral.
The latest Eighty20/XDS Credit Stress Report for the fourth quarter of 2022 shows an increasing appetite for credit among South Africans, with more than 800,000 new entrants into the credit market over the period.
However, this has come with a surging number of loans, notably credit card, VAF and home loans, that are newly in default.
“This compares with 600,000 the previous year, signalling a deepening debt spiral among over 18 million consumers – more than one-third of the population,” the group said.
Even more worrying is that these new entrants took out R9.3 billion in new loan value, the highest in more than 2 years, and up nearly 10% on last year.
In addition, there has also been a significant surge in credit card balances with total loan balances up R25 billion (12%) year-on-year.
This brings the total credit active population to 18.7 million with total loan balances of a staggering R2.3 trillion.
Read: Debt spiral warning for consumers in South Africa