Disturbing results from a new survey of credit-worthy consumers show that borrowing has now become a lifeline for many South Africans as they become unable to repay their debts due to macroeconomic pressures beyond their control.
Neil Roets, CEO of Debt Rescue, says that disturbing insights from the survey show that 41% of respondents indicated they defaulted on their credit cards over the past year, while 30% missed payments on retail store accounts.
“Credit cards and store accounts are the two most commonly used forms of credit for day-to-day expenses because they are existing facilities consumers have access to. They are now becoming increasingly unaffordable while providing the only lifeline for many consumers.”
In addition, the survey outcomes show that 24% of people polled also defaulted on their personal loans, with 31% of respondents attributing this to unexpected expenses and 21% to loss of employment.
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50% of respondents cannot afford necessities
Roets says underlying this escalating debt crisis is the inability of half of the respondents (50%) to afford basic necessities such as food, electricity, or fuel due to a lack of available funds, with a full 50% saying they had to turn to credit to buy food, electricity, or fuel in the past 12 months.
“This points to the widespread financial distress many South African households find themselves in, due to economic pressures which have seen living costs skyrocket over the past few years while there has been very little in the way of financial relief in terms of interest rates, cost of living and tax reductions.
“65% of the respondents said current economic conditions are significantly affecting their ability to repay debt,” he adds.
South African consumers are drowning in debt with no easy way out and the new Eighty20 XDS Credit Stress Report for the first quarter of 2025 confirms this, showing that middle- to high-income earners are feeling the pinch as well.
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South Africans unable to repay loans even after borrowing more
Statistics from the report paint a grim picture, with figures showing the alarming increase of R130 billion (5.3%) in loan balances from 2024 to 2025 and an increase of R25 billion (13.7%) on overdue loan repayments.
This extends to home loans with overdue payments up by 21.5%, while there has also been an alarming surge in credit card debt which is up by 8.7% from 2024 and of the 350 000 new credit users, 53% have already missed payments.
“These numbers reflect the reality of life right now for millions of South Africans who are unable to keep up with paying their rent, car payments, groceries and school fees, while they are defaulting on all sources of debt and credit. This is not a case of overspending on luxuries but simply a means to financially get by,” Roets warns. He has been sounding the alarm for well over a year now.
He says the elephant in the room is, of course, the many millions more who do not qualify for credit and are hanging on by a very thin thread, with the latest statistics showing that 25% of the population now live below the food poverty line according to the World Bank and over 30 million people living below the upper-bound poverty line of approximately R1 634 per month.
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62% of South Africans living in poverty
According to ISS Africa, figures for South Africans living in poverty have hovered around 62% in recent years, and on the current growth trajectory, this is set to inch down marginally to 60% over the next decade.
Roets says this is largely the result of escalating food, energy, water and fuel costs, driven by an economy in deep trouble, which has led to the current unsustainable unemployment level of 32.9% of the population.
“It is only possible to reduce unemployment with a rapidly growing economy and the figures showing economic growth of just 0.1% in the first quarter of 2025 fail to inspire much hope.
“While 27% of people polled by Debt Rescue said they are compelled to take on part-time jobs or freelance work to increase their income – simply to meet the monthly needs of their families and themselves, many are simply unable to extend their working hours to accommodate earning an extra income and taking on debt becomes the only other alternative.”
