7 Things You Need to Know About Debt in South Africa
South African consumers are heavily indebted, with many owing a significant portion of their monthly income to creditors. Here are seven key findings about the debt situation in South Africa:
- High Debt-to-Income Ratio: Consumers owe up to 75% of their monthly pay to creditors.
- Age Group Affected: The 31-45 age group accounts for the majority (53%) of those in debt, with a notable increase (39%) in debt review applicants under 25.
- Home Loan Struggles: 56.86% of consumers are struggling to pay their home loans.
- Credit Card Debt: 58.83% of consumers are battling to pay off their credit card debt.
- Interest Rate Ignorance: 38.67% of consumers with bank accounts do not know the interest rate on their savings accounts.
- Banking Fee Awareness: 22.19% of consumers are unaware of their banking fees.
- Limited Savings: Only 23.42% of South Africans have money left at the end of the month, indicating widespread financial strain.
Debt Rescue also found that many South Africans are unaware of their rights regarding expired (prescribed) debt, and the fact that credit providers are not allowed to collect on this debt. This lack of financial literacy contributes to over-indebtedness. Data from the South African Human Rights Commission (SAHRC) indicates that over half of the 19 million credit-active consumers in South Africa have impaired credit records, and over 11 million are considered over-indebted.
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