The Interest Trap

Here’s the hard truth: when you only pay the minimum monthly instalment on your credit card or personal loan, most of that money goes toward interest, not your actual debt, also called the ‘capital amount’. In some cases, if the interest rate is high, you’re paying back more interest each month than you are reducing your actual balance.

That’s why your debt doesn’t shrink. It just sits there. Sometimes it even grows!

If your loan is sitting at a 21% annual interest rate and you’re only managing minimum repayments, you could spend years, or decades, trying to pay it off. That is not sustainable, especially when food, fuel, VAT, rates, levies and electricity prices are rising too.

What Is Debt Review In South Africa?

Debt review is a formal, legal process regulated by the National Credit Act. It’s specifically designed to help over-indebted South Africans, people who are struggling to meet their debt obligations every month.

When you enter debt review:

• All your debt is consolidated into one reduced monthly payment,
• Credit providers are legally prohibited from contacting you or taking legal action,
• And, this is the big one: interest rates are negotiated down, depending on your circumstances.

This is how people finally get out of the interest trap.

How The Interest Gets Reduced

What happens to interest in debt review in South Africa? The debt counsellor works with your creditors to propose a realistic repayment plan based on what you can actually afford. Creditors would rather receive reduced, consistent payments than risk you defaulting completely. 

Most creditors agree to lower your unsecured debt interest rates (like on credit cards or personal loans), and occasionally even home loan interest rates, depending on your case. This ensures that your monthly payments actually start going toward reducing the capital, not just interest.

Breaking The Cycle Starts With One Step

If you’re earning and trying to get ahead but the interest is killing your budget, you have a strong case for debt review. Once your repayments are adjusted to fit your budget and the interest is reduced, you finally start seeing your balances shrink. That’s the power of structured, legal protection through debt review.

Final Freedom Starts Here

If your debt feels like it’s going nowhere, despite your best efforts, it’s not you. It’s the interest. Don’t wait until you’re drowning. Debt review isn’t a trap; it’s a lifeline.

Stop drowning in interest now that you know what debt review is in South Africa.