A recent study of debt and defaulting behaviour showed affluent South Africans are increasingly reliant on credit cards to stay afloat and manage the rising cost of living, pointing to a worrying trend of deepening financial strain among the middle class.
Data from Experian showed affluent consumers, who are traditionally seen as low risk, are increasingly reliant on revolving credit to manage the cost of living, and have seen their default rates for personal loans and credit cards deteriorate over the past year.
The group’s Consumer Default Index (CDI) tracks how often South Africans default on their debts for the first time for home loans, vehicles loans, personal loans, credit cards and retail loans.
Somewhat encouragingly, the index for the final quarter of 2025 showed an overall improvement in credit defaults among the sample, but this was largely driven by mortgages, suggesting more homeowners are prioritising keeping up with large, secured loans.
This improvement masks financial strain in other areas of life, said Experian Africa chief of strategy and innovation Jaco van Jaarsveldt.
He said affluent consumers’ growing reliance on credit cards and signs of strain in unsecured loans points to a “persistent battle with day-to-day affordability” in an economic environment which has come to be defined by “careful financial trade-offs”.
“The fact that affluent consumers are keeping up with mortgages but falling behind on unsecured credit and using credit cards more to get by is a red flag.
“It tells us that even high-income households are feeling the pressure. They are being courted by multiple lenders, leading to expanding credit exposures that are stretching their affordability to its limits.”
The cost of living is unlikely to ease in the coming months as conflict in the Middle East forces the SA Reserve Bank to rethink its interest rate decisions, while fuel prices skyrocket.
The prospect of rate cuts this month, which would have brought much-needed relief to consumers and businesses, have been largely written off this month in the wake of the Iran war. Some analysts now expect the Reserve to hike rates in the coming months.
PayInc, the company responsible for clearing payments between South Africa’s largest banks, warned this week South Africa’s vulnerability to fuel supply leaves the country exposed to a wave of rising inflation with knock-on effects across the entire local economy in the coming months.
Motorists are expected to face some of the biggest monthly increases in petrol and diesel prices on record on April 1, with the international oil price having surged more than 40% since the US and Israel began strikes on Iran on February 28, prompting the latter to halt shipping through the Strait of Hormuz and putting around a fifth of global oil supply on hold.
Against this backdrop, industry players have been urging retailers not to hike prices on existing shelf stock that has not yet been affected by the conflict. In the coming months, rising global oil costs are widely expected to boost production expenses in the food sector, meaning higher costs for essential goods.
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