Prime Rate Up: Why Debt Review Protects You

When the South African Reserve Bank raises the repo rate, the knock-on effect hits millions of households almost immediately. Home loan repayments climb, credit card interest compounds faster, and vehicle finance becomes more expensive. For consumers already stretched thin, even a 25 basis-point hike can tip a manageable situation into a crisis.

If you are currently under debt review, however, you have something most other borrowers do not – a fixed, court-approved repayment plan that does not move with the prime rate.

What Is the Prime Rate and Why Does It Matter?

The prime interest rate is the benchmark lending rate that South African banks apply to most credit products. It sits at 3.5 percentage points above the repo rate, which is set by the South African Reserve Bank (SARB) Monetary Policy Committee. When the SARB adjusts the repo rate, every credit product linked to prime moves with it.

That means your home loan, car finance, personal loan, and credit card balance can all become more expensive overnight – without you signing a single new document.

How Interest Rates Are Calculated Under Debt Review

One of the most significant protections debt review provides is interest rate certainty. When a debt counsellor restructures your debt and a court issues a consent order or debt review order, your repayment terms – including interest rates – are set. Those rates do not increase when the prime rate goes up.

This is distinct from how repayments are normally worked out outside of debt review, where variable interest rates mean your monthly obligations shift with every SARB announcement.

The interest rates negotiated in your debt repayment plan are the rates you pay until your debts are settled. Creditors cannot unilaterally increase them while you are in the process.

What Happens to Existing Debt Under Debt Review When Rates Rise?

Once your debt counsellor has submitted your Form 17.1 and your accounts are flagged under debt review, your accounts are governed by the restructured plan. While creditors may have originally set rates linked to prime, the restructured repayment amount agreed through negotiation provides a stable monthly figure.

You can read more about what outstanding payments can be placed under debt review on our blog – the short answer is that most credit agreements, including unsecured and secured debt, are included.

Is Debt Review a Good Option When Interest Rates Are High?

Rate environments put pressure on everyone, but they hit over-indebted consumers hardest. If you are already struggling to make minimum payments across multiple accounts, a rate increase makes recovery harder without intervention. Debt review exists precisely for these moments.

The benefits include:

• A single, reduced monthly repayment that accounts for your actual income and living expenses
• Protection from creditor harassment and legal action under the National Credit Act
• Negotiated interest rates that your debt counsellor locks in with your credit providers
• Protection of assets such as your home and vehicle while the process is active
• A clear path to a debt clearance certificate once all restructured obligations are met

You can explore the full list of debt review benefits in more detail on our website.

What About When the Prime Rate Drops?

South Africa has been in a rate-cutting cycle since September 2024. The prime rate currently sits at 10.25%, following a series of reductions by the SARB. For consumers not under debt review, those cuts offer some relief. But for people under debt review, the restructured plan already provides a repayment level that takes affordability as its starting point.

If you want to understand what rate changes mean for consumers generally, our earlier post on what to expect with interest rate changes covers the broader picture.

How Debtco Group Can Help

Debtco Group is registered with the National Credit Regulator (NCR number: NCRDC3277) and has been assisting over-indebted South Africans since 2010. Our debt counsellors are experienced in negotiating with credit providers, and our team will guide you through every stage of the process.

If rising interest rates have pushed your finances past a tipping point, do not wait for the situation to worsen. The sooner you apply for debt review, the sooner your repayments are stabilised and your assets are protected.

Call us on 021 007 1422 or visit our contact page to get started with a free assessment.