I recently received a message from my bank (better not say what colour bank) telling me that I have available funds in my home loan account that I could use to reach some of my ‘financial goals’. Borrow more and reach your goals. It’s telling me.
Then I noticed similar messages from the other colour bank I use, telling me that I may qualify for a personal loan of R300,000 or a credit card with a R90,000 limit.
I think putting these sort of messages in front of consumers should not be allowed. Yes, a bank makes most of its money by lending money. And so maybe that’s marketing and selling. Like a supermarket advertising, whose worst lines are ‘spend and save’. But this is different. Putting a message in front of a consumer to borrow more money might not be helpful.
It is very good for those with property bonds to put in extra each month and reduce it faster, but not with the purpose of withdrawing and spending again. The only other reason to use available funds from your access bond, should be as an emergency fund. Although from what people are accessing their retirement savings for, emergency means different things to different people.
Encourage yourself, encourage your children, encourage your friend, not to access their bonds. Not take to take out short term loans. Not to use funds like this for a new car or a holiday or painting their house.