The financial impact of double-digit electricity increases on entry and middle-income households

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07 April 2021:  In the wake of the 15% increase in electricity tariffs for 2021/22, many households will have to review their already stretched budgets to keep the lights on. According to FNB insights, electricity spend is one of the largest spend categories for entry to middle income customers. As a result, these customers need to review their monthly budgets to accommodate the increase and overall cost of living.

FNB data shows that the average electricity spend by a customer who holds its Entry Market bank account (Easy accountholder) increased by 9% (on average) between 2019 and 2020. The average monthly electricity spend by a Middle Market (Gold accountholder) customer increased by 15% while a Mass Affluent (Premier accountholder) customer spent 14% more on electricity over the same period. These customers regularly turn to eBucks to supplement their electricity purchases, using roughly R4.5 million worth of eBucks for electricity purchases over the same period.

CEO of the Middle Market segment, Rob Gwerengwe says, “The reality is that all customers will need to factor a 15% increase on what they have been spending on electricity on a monthly basis. In the case of a household which spends roughly R500 per month on electricity, that household has to factor at least R75 in addition to what they have been paying. Unfortunately, this increase comes at a time when customers are heavily strained financially and these financially stressful times require every individual to scrutinise their budget a lot closer. We always recommend that our customers find alternative ways to supplement their income and our Bucks rewards is a great example of how we’re assisting customers to better manage their money.”

The sentiment is echoed by Kamal Kalian, CEO of Mass Affluent segment at FNB, who says, “It’s no secret that the finances of customers in these income categories are stretched and some often rely on debt to get through the month. 

The amount of rewards spent every month on electricity purchases by our customers reflects the positive contribution we are making in helping them stretch their money even further. More importantly, we are also enabling customers to better manage their money by providing them with tools like nav>> smart budgeting on the FNB App.”

FNB recently launched an innovative smart budgeting tool for customers, located under the nav» Money functionality on the FNB App. The smart budget tool uses the banks dynamic data capability to create a level of accountability and real time coaching that has not been provided before. FNB customers are able to take control of their spend, set budget limits and get notified; when they are halfway there, just before they get there and once, they have hit their budget amount.

Main Image: Financial Times

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