Consumers 'proactively' managing credit - index
South Africa’s largest debt management company, DebtBusters, said in 2024, consumers were more proactive in managing their credit than in previous years.
DebtBusters released its Debt Index for the fourth quarter of 2024 on Tuesday.
The release coincides with National Debt Awareness Month.
It also comes on the back of the South Africa Reserve Bank’s decision to cut the repo rate by 25 basis points, bringing some relief to indebted consumers.
The index shows that income growth still lags behind expense growth – with consumers having 42% less purchasing power than they had in 2016.
The executive head of DebtBusters, Benay Sager, said this was compounded by hikes in electricity tariffs, petrol prices, and inflation.
"If we compare the full year 2024 to the full year 2023, there was increased demand from consumers for debt management, with debt counselling inquiries up by 8% and online debt management up by 9%.
"While it is early days in 2025, we anticipate stronger demand this year as consumers’ desire to become financially sustainable continues to grow.”
Sager said consumers who applied for debt counselling in the fourth quarter needed 68% of their take-home pay to service their debt expenses.
"Eighty-two per cent of these consumers had a personal loan. A further 52% of consumers had a one-month (payday) loan, indicating that consumers continue to supplement their income with short-term unsecured credit, and personal loans, especially one-month loans, have become a lifeline for many.”
