Capitec Bank clients who made use of payment breaks are set to benefit from a 3-month 100% interest refund on their loans. The bank announced this relief measure while many South Africans are under financial strain due the Covid-19 pandemic.
The interest refund will be available to all clients who have taken up Capitec’s Covid-19 payment break or rescheduling relief plan between 27 March and 30 June 2020.
Gerrie Fourie, CEO of Capitec explained “While payment holidays offer clients the temporary financial relief needed during this time, loans still incur interest, which increases the total cost of credit. While this is only about 20% of our credit clients we want to help them as much as possible during this time, which is why we will waiver the interest accumulated during the first 3 months of the relief period, provided they are in good standing and continue to meet their loan repayments.”
To qualify for the interest reduction clients will need to honour their loan instalments after the relief period. After 6 months’ of successful loan repayments, a refund equal to 50% of the interest charged on the loan during the 3 months will be paid directly into the client’s loan account. After a further 6 months’ successful repayments, another 50% of the interest charged during the first 3 months will be refunded.
For instance a loan of R100 000 at an interest rate of 18%, will incur additional interest of R4 568 over 3 months. If a Capitec client made use of a relief plan and pays the instalments afterwards, R2 284 will be refunded into the loan account after 6 months and a further R2 284 after another 6 months. In effect, the client then paid zero interest for the 3-month relief period.
Capitec, who looks at the individual needs and financial wellbeing of each client when granting payment breaks, says the interest refund will help clients to recover faster. Fourie added, “This is another way we are helping our clients to live better. The interest refunds not only ease the financial pressure on our clients but encourage good financial behaviour by rewarding clients for meeting their loan repayments, which in turn keeps their credit records in good standing.”