Debt management company DebtBusters says the successive interest rate cuts by the SA Reserve Bank (SARB) this year have helped consumers facing severe financial strain breathe a sigh of relief, as some needed 70% of their take-home pay to service their debt.
This has seen more than 50% of consumers taking short-term unsecured credit and personal loans, especially one-month payday loans, to supplement their income and keep afloat.
The Bank cut the interest rate in January, May and July, with the repo rate being lowered to 7.50%, 7.25%, and 7.00%, respectively.
DebtBusters executive head Benay Sager said in the third quarter of 2025 there was increased demand by consumers for debt management, with online debt management subscriptions up 47% compared to the same period last year.
According to a third-quarter debt index released by DebtBusters, there were 12 times more consumers “graduating” or getting clearance certificates compared to 2016 levels.
“Consumers who received clearance certificates in the most recent quarter paid R540m to their creditors while in debt counselling,” according to the report.
It noted that while consumers’ financial confidence may have improved in 2025, income growth was still significantly behind expense growth.
“Since 2016, electricity tariffs have increased by 165%, the petrol price by 80%, and inflation’s (CPI) compounded impact is 51%. As a result, it is perhaps not surprising that consumers who applied for debt counselling in [the third quarter] needed 70% of their take-home pay to service their debt,” Sager said.
He said 95% of these consumers had a personal loan, a move he described as a new record.
“A further 57% of consumers had a one-month (payday) loan — another record — indicating that consumers continue to supplement their income with short-term unsecured credit, and personal loans, especially one-month loans, have become a lifeline for many.”
Compared to 2016 cohorts, consumers who applied for debt counselling in the third quarter had 48% less purchasing power; high debt service burden with 70% of net incomes going toward paying debt, with those taking home R35,000 or more per month needing to use 78% of their income toward debt repayments, and their total debt to annual net income ratio was a record high 189%, Sager noted.
Those taking home R5,000 or less per month, “who are our most vulnerable group, need to use 92% of their income towards debt repayments. These ratios are at their highest-ever levels”.
“In addition, because of food inflation, those taking home R10,000-R20,000 per month, the backbone of our economy, had to spend more than 34% of their disposable income on food, leaving little room for insurance and assurance expenditure.”
Sager said the R540m paid to creditors as part of the debt counselling process during the third quarter would circulate back to the economy for “small business lending, investment and growth”.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.