Debt Rescue provide statistics on consumer debt in South Africa including the rate of over-indebted South Africans undergoing debt review.
According to the latest credit statistics, the total outstanding consumer debt for the quarter ending September 2015, is R1.63 trillion. That’s more than the whole country of Angola made in gross domestic product (GDP) last year. In-house statistics from Debt Rescue, one of South Africa’s largest debt management firms, reveal that more than half (51 percent) of indebted consumers are women.In South Africa, we love to spend money, live large, enjoy life. We have the mountains, the beautiful beaches, and the Jones’ next door with their grass that always looks just a little greener than ours. We all want to live la dolce vita with the car, the house, the clothes, and the disposable cash. And we want it all yesterday. But putting that kind of pressure on yourself could land you in deep waters, and by that we mean debt.
Where Are South Africans Becoming Over-Indebted?
Debt Rescue CEO, Neil Roets, says that more than half of credit-active consumers owe as much as 75 percent of their full salary to creditors. But he says what’s more alarming than how over-indebted South Africans are, is the growth they’re experiencing as a company. “Debt Rescue’s overall growth in indebted consumers who seek relief by [undergoing] debt counselling (or debt review) now tops 40 percent year-on-year,” said Roets. He draws a parallel between this growth and the poor state of the economy.Of the outstanding R1.63 trillion in consumer debt, mortgages (bonds) account for the majority at R862.26 billion (52.81 percent). Short-term credit, like payday loans, comes in at the bottom of the list at R3.23 billion (0.2 percent). But where consumers become over-indebted (outstanding debt), Roets identified three main problem areas. They are personal loans (94 percent), credit cards (84 percent), and store cards (76 percent). Historically, these types of credit accounts also bear the highest interest rates.
Why Are South Africans Becoming Over-Indebted?
Debt Rescue, awarded Best Debt Counselling Company in South Africa, follow a process of investigating the reasons behind over-indebtedness with clients. They are amazed at how many consumers admit spending their credit on non-essential or luxury items. Roets says what we would consider an essential item, i.e. a mortgage, comes in last on the list of where South African consumers struggle with outstanding debt.The South African Human Rights Commission (SAHRC) reports that, of the 19 million credit active South African consumers, more than 11 million are over-indebted. More than half have impaired credit records, owing as much as three months in arrears.Roets stressed, in an interview, the importance of contacting a debt counsellor as soon as you start falling behind on your monthly payments. And before your credit record becomes impaired. "If you wait too long, you stand the chance having a credit provider take legal action against you. If this happens, that certain account will not be able to be placed under debt review,” he warns.Good things do come to those who wait, but not to those who wait for their problems to disappear. CLICK HERE to apply for Debt Review.