Guest post by Paul Beadle.

Hooray! The interest rate has been frozen for the next couple of months, but please don’t take this as your cue to celebrate and hit the credit cards – we’re not out of the woods yet.

Putting interest rates on hold simply means the cost of your existing debts won’t increase. The cost of living is still on the rise and the economy is uncertain, so returning to our free-spending ways will stoke inflationary pressures and send us back to square one.

Several banks have been making noises about a higher number of defaulters, with Absa’s boss cheekily suggesting that his executives would receive their bonuses in the form of repossessed cars!

More worrying for borrowers is the policy of some mortgage lenders to ‘review’ home loans they have approved, but have not registered, threatening to reduce or pull bonds completely if they feel the customer’s affordability has diminished.

So if you’ve tightened your belt over the last few months, then keep it tight. Use any extra cash to pay off more of your debts, but if you’re debt-free you’re better off investing for your future than you are going on a spending spree.

Perhaps now is the time to consider that life insurance policy you couldn’t afford before, so you can provide for your loved ones should you be unable to work due to illness, disability or death.

No one’s saying “don’t have a good time”, but when the interest rate drops, then that’s the time to break out the champers!

Paul Beadle is the editor of www.justmoney.co.za, South Africa’s online guide to money. A self-confessed personal finance anorak, Paul oversees the wide range of www.justmoney.co.za tools and guides, ranging from a bank charges comparison tool through to help with loans and debt management, designed to help consumers make more informed decisions about the financial services products that best suit their needs.