The index found that those earning more than R50 000 a month need 101% of their salary to service debt.
Debt Busters’ latest quarterly debt report shows that even top earners are under severe financial strain, with many needing more than their entire monthly salary just to cover debt repayments.
The Debt Index for the first quarter of 2026, released on Tuesday, revealed that South Africans benefited from the two-pot retirement system and interest rate cuts. However, the index highlighted that global pressures are now driving core inflation, while possible interest rate increases are on the table.
The South African Reserve Bank (Sarb)’s Monetary Policy Committee (MPC) will, on Thursday, announce its decision on interest rates. It is anticipated that Governor Lesetja Kganyago will announce an increase due to the ongoing Middle East war.
Salaries fail to keep up with debt
Benay Sager, executive head of DebtBusters, said debt burdens remain elevated and income growth does not keep pace with rising costs.
The DebtBusters’ Index is a quarterly report that analyses data from South Africans who apply for debt counselling to gauge the country’s financial health. It highlights trends in debt-to-income ratios, unsecured debt levels, and the overall debt-service burden.
The index found that people who applied for debt counselling during the quarter needed 64% of their take-home pay to service debt.
It was found that the top earners, taking home more than R50 000 a month, needed 101% of their salary to service debt, while their debt-to-income ratio is 303%, the highest of all the income bands.
Types of debt needed to be serviced
Sager highlighted that income gains have been concentrated in higher-income bands, while lower earners have seen little or no real improvement since 2016. As a result, people have increasingly turned to unsecured credit to bridge the gap.
During the first quarter of 2026, 96% of debt counselling applicants had a personal loan, and 61% had a one-month or payday loan.
“The average number of credit agreements per applicant reached 8.5, the highest level since 2017, highlighting the growing role multi-lender relationships are playing in consumer finances,” said Sager.
Unsecured debt levels
He added that average unsecured debt levels are 23% higher than in 2021.
“For those taking home R50 000 or more, the figure is 99% higher, double the 2021 levels,” noted Sager.
“This far outpaces both inflation at 27% and salary growth of 6% for this income band, indicating that top earners are under acute financial stress.”
The index showed that top earners’ debt has grown by 42% since 2021, exceeding inflation, while lower-income earners have seen total debt decline by up to 25%. The reduction in the lower-income group can be attributed to less access to credit rather than improved financial health.
Interest rates on credit agreements
Sager said interest rates on credit agreements have continued to ease, in line with the Reserve Bank’s rate reductions.
“The average unsecured credit rate is now 17.9% per annum, but the median is 20.3%, indicating the range of interest rates consumers are charged on unsecured debt,” he added.
“The average interest rate for vehicle finance is 13.6% per annum. For home loans, it is 10.2%. The share of home loan debt has fallen from 30% in Q2 2023 to 20% in Q1 2026, reflecting the impact of the interest rate cuts that took place from Q3 2024 to Q4 2025.
“Higher-income earners have a larger proportion of secured debt, but middle-income earners feel the pressure of vehicle loans the most.”
Earners between R10k and R20k
Sager highlighted that most of the country’s working population earns between R10 000 and R20 000 a month and spends almost a third of their disposable income on food. As result, this group hardly have any left for insurance, savings, or emergencies.
“Interestingly, almost all consumers spend roughly 10% of disposable income on transport, about 9% on utilities, and about 4% on cell phone charges,” he said.
However, the index revealed a concerning finding: earners born after 2000 account for 9% of new debt counselling applicants. Sager said this signals financial stress is beginning to affect a new generation earlier in their adult lives.
Dangers of debt counselling
If your expenses and debt repayments are greater than your income, debt counselling can be a lifeline. Its structured debt review process helps you take back financial control.
However, according to Debtsafe, there are some negative effects.
- You are legally prohibited from acquiring new loans, credit cards, or store accounts while undergoing the process.
- A “debt review” flag is placed on your credit profile. This flag is only removed once you receive a Clearance Certificate.
- Because your monthly instalments are lowered, it may take longer to pay off your total debt fully.
- The process is not free; debt counsellors charge restructuring and aftercare fees, which are strictly regulated by the National Credit Regulator (NCR).
- Missing payments can breach your debt review agreement, exposing you to renewed legal action from creditors.