Capitec Bank clients who made use of payment breaks are set to benefit from a three-month 100% interest refund on their loans. The bank announced this relief measure last month while many South Africans are under financial strain due to the Covid-19 coronavirus 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 March 27 and June 30.
Gerrie Fourie, chief executive of Capitec, said: “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 waive the interest accumulated during the first three 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 six months of successful loan repayments, a refund equal to 50% of the interest charged on the loan during the three months will be paid directly into the client’s loan account. After a further six months of successful repayments, another 50% of the interest will be refunded.
For instance, a loan of R100 000 at an interest rate of 18% will incur additional interest of R4 568 over three months.
If a Capitec client made use of a relief plan and paid the instalments afterwards, R2 284 would be refunded into the loan account after six months and a further R2 284 after another six months. In effect, the client then paid zero interest for the three-month relief period.
Capitec, which 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: “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.”