The Current State of Consumer Debt in South Africa

What is consumer debt?

Consumer debt refers to debt incurred by an individual to use primarily for personal, household, or family purposes.  

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The current state of consumer debt in South Africa

The current state of consumer debt in South Africa (as of the second week in August 2026) is clearly evident in 2 articles on the website of BUSINESSTECH and in the Consumer Default Index (CDI) (dated May 2026) of the credit bureau Experian. Interesting, but sobering data. (Note: Accentuations in the articles of BUSINESSTECH and the CDI of Experian are by the article writer of SA Shares.)  

BUSINESSTECH article on 7 June 2026

In this article, with the heading, ‘Middle-class South Africans are battling to make ends meet,’ BUSINESSTECH provides data obtained from the National Debt Counsellors Association (NDCA), the debt management company DebtBusters, and the financial services company Transaction Capital.

• The National Debt Counsellors Association (NDCA)

According to the NDCA, ‘enquiries about debt counselling have grown significantly.’ Some members of the NDCA recorded increases of over 30%. As mentioned in the article, the chairperson of the Association (Benay Sager) cited the ‘effect of consecutive lockdowns’ and an economy ‘already struggling before the pandemic’ as reasons for the increasing numbers. Sager is quoted, saying: ‘Loss of income, salary reductions, bonuses, and incentives that have been reduced or not paid at all, combined with payment holidays coming to an end and already high levels of household debt meant people who were previously just about getting by no longer could.’  

• DebtBusters

Data (published in May) obtained from DebtBusters indicates ‘that middle-class South Africans have been particularly hard hit and are spending more of their salaries to make ends meet.’ Further sobering data from DebtBusters is ‘that people applying for debt counselling with take-home pay of over R20, 000 per month are spending over 60% of their monthly net income to service debt and have a persistently high debt-to-income ratio of over 130%.’  

• Transaction Capital

The article also refers to a warning by Transaction Capital, with the implication ‘that as much of a third of South Africa’s middle-class could be wiped out due to the various lockdowns.’  

BUSISNESSTECH article on 20 July 2026

The heading of the article says it all: ‘South Africans are spending of 75% of their take-home pay on debt.’ Joseph Phiri, a certified financial planner at Alexander Forbes, is quoted, saying: ‘… debt to disposable income for South African households has increased from less than 60% before 1994 to the current level of around 75%, which is higher than the long-term average of 70% according to the South African Reserve Bank (SARB),’ and, ‘This means that households spend three-quarters of their take-home-pay on debt and only have a quarter of their salary to spend on everything else. This worsens if the interest rates increase and the cost of paying the debt rises.’ The figures above exclude debt obtained from informal credit sources such as loans sharks.  

Experian’s Consumer Default Index (CDI) - dated May 2026

The credit bureau Experian publishes a Consumer Default Index (CDI) quarterly. The CDI has a two-month lag. Basically, the purpose of the CDI is to track ‘first-time default rates for South African consumers.’ According to Experian, the CDI ‘is designed to measure the rolling default behaviour of South African consumers with Home Loan, Vehicle Loan, Personal Loan, Credit Card, and Retail Loan accounts.’ In addition, the different types of loans are also grouped in two indices respectively:

• Home Loans, Vehicle Loans, and Credit Cards are typically held by the ‘traditionally banked market segments.’
• Personal Loans and Retail Loans are ‘usually used as entry products into the credit market.’

A consumer is considered to be in default, ‘when a lender deems the statement balance of a consumer account to be uncollectible due to being in arrears 90 or more days or having statuses such as repossession, foreclosure, charge-off or write-off.’ The marginal default rate is tracked by the CDI ‘as it measures the sum of first-time defaulted balances, i.e., accounts that have never previously defaulted, as a percentage of the total sum of balances outstanding.’ The latest CDI, Quarter 1 2026, was published by Experian in May 2026, with the title: ‘A Look at the New Now.’ The data in the table below indicates how the CDI regarding the different types of loans deteriorated or improved Y-o-Y (March 2026 - March 2026) The figures in the last two columns are rounded off to the nearest trillion or billion. Some observations with regard to the data below:

• By at end of March 2026, a massive R1.9 trillion was outstanding in debt.
• The composite index deteriorated by 3.34% (4.19% to 4.33%), mainly due to deteriorations in six of the eight indices.
• Only two of the eight indices improved from March 2026 to March 2026, namely Home Loan and Retail Loan.
• The Personal Loan index shows the highest new default balance (R7.5 billion) and the Retail Loan index with the lowest balance (R1.1 billion).

    The May 2026 CDI reported that there are 23.7 million consumers with Credit Card, Personal loans, Vehicle Loans, Home loans, and/or Retail Loan accounts. Furthermore, Credit Card, Personal loans, Vehicle Loans, Home loans, and or Retail Loan accounts, comprise 29 million accounts. The CDI also analyses the six groups that are included in Financial Affluence Segmentation (FAS) ‘to provide further insight into the dynamics faced by specific consumer affluence-related segments that are experiencing different stress due to macro forces such as unemployment, interest rate changes, and economic growth.’ Experian describes the six macro-FAS groups as follows:

• FAS Group 1: Luxury Living (5% of the credit-active population) - Affluent individuals representing the upper crust of South African society with the financial freedom to afford expensive homes and cars.
• FAS Group 2: Aspirational Achievers (3% of the credit-active population) - Young and middle-aged professionals with the resources to afford a high level of living while furthering their careers, buying property, and establishing families.
• FAS Group 3: Stable Spenders (2% of the credit-active population) - Young adults with that rely on financial products to assist in making ends meet or to afford specific necessities such as clothing and school fees or seasonal luxuries.
• FAS Group 4: Money-Conscious Majority (40% of the credit-active population) - Older citizens that are conscious of where and how they spend their money, often seeking out financial products to cover basic needs or for unforeseen expenses.
• FAS Group 5: Laboured Living (24.6% of the credit-active population) - Financially limited individuals as salaries are below national tax thresholds; they spend their money on basic living necessities such as food and shelter.
• FS Group 6: Yearning Youth (4% of the credit-active population) - Very young citizens that are new to the workforce; this mix of labourers and possibly working students earn low salaries and are limited to spending on non-essential goods.

  Experian provided the following Composite Consumer Default Index by Macro-Financial Affluence Segmentation (FAS) *Column added by the SA Shares article writer   Some observations regarding the data above:

• Noteworthy, the two most affluent FAS groups, Luxury Living (Group 1) and Aspirational Achievers (Group 2), are the most negatively affected because of high exposure to secured debt.

Group 1 deteriorated from 2.65% in March 2026 to 3.42% in March 2026, a deterioration of 29%. The Luxury Living Group is highly exposed to Vehicle Loans and Credit Cards of which the group holds a third of the market. The Aspirational Achievers Group deteriorated by 7%, from 3.55% to 3.80%. The Vehicle Loan market comprises almost 50% of this group, while more than 40% of the Credit Card market consists of Aspirational Achievers. Both these markets showed deterioration for the particular period.

• The bottom two groups, Laboured Living and Yearning Youth, are the least exposed to secured debt and have fewer opportunities to acquire debt. Hence the more favourable CDI changes and lower new default balances.

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