According to The Experian Consumer Default Index (CDIx), which measures the rolling default behavior of South African consumers with Home Loans, Vehicle Loan, Personal Loan, Credit Card, and Retail Loan accounts, as of the end of 2023, South African households had close to R2 trillion in outstanding debt, with R25.8 billion being in default.
Something concerning is happening-Experian says that mid-to-high-affluence consumers, who normally qualify for high-end credit products and home loans, are finding it increasingly difficult to repay debt and continue to use their credit cards extensively.
There has also been a surge in Debt Review applications in South Africa, as higher-affluence consumer groups are increasingly struggling to honor their debt commitments.
In many instances, despite various avenues available where consumers can seek assistance, households are avoiding it, leaving debt to spiral out of control.
Collectively, South African households owed a mind-boggling R305bn in arrears to local municipalities as of December 2022 (reported by the National Treasury). This greatly impacts service delivery and contributes to major challenges in maintenance and infrastructure in our country.
FNB estimates that it takes an average of five days for a middle-income consumer to spend up to 80% of their monthly salary.
From the same report, we see that the average middle-income SA consumer, earning between R180 000 - R500 000 per annum, survives on 20% of their monthly salary for more than 20 days in a month. In addition, salaried middle-income consumers with secured and unsecured credit spend, on average, 30% of their income on unsecured credit and 35% on secured credit.
How are you with your money, do you follow good money habits?