Find Out What A 1000 South Africans Told Us About Their Relationship With Credit
We recently surveyed a thousand South Africans (well 1195 to be exact) and asked them a few personal questions about how they are handling their credit agreements in a particularly tough economic climate.
Our very own National Credit Regulator estimates than more than 10 million rainbow nationers are a pay cheque or two away from financial disaster. The World Bank echoes this sentiment placing us firmly in the top drawer of borrowers in the world. Not exactly the award you want to go home with at the end of the school year, right?
There are many reasons why South Africans are borrowing money from credit partners. If you are feeling the pinch, it’s largely down to:
- The rising cost of living in South Africa
- Salaries that aren’t tracking inflation
- Large scale retrenchments
What valuable insights did we extract from our Moneyshop survey participants?
We’ve listed 7 key points below:
- 66% of participants recently had a credit application declined.
- 22% of participants have received some type of assistance from a Debt Counsellor.
- Only 50% of the people surveyed indicated that they check their credit score regularly.
- 69% of people who took the survey indicated that borrowing money is helping them make ends meet.
- But 42% of people said that taking on the extra debt is putting them in a situation they are battling to get out of.
Time to put this into context.
1000 average South Africans decide to participate in a credit survey on our website. Almost 70% of them either have so much debt, or credit records that are so impaired they can’t borrow any more money.
The reason why they are applying for more credit in the first place isn’t to buy fancy new items like an Iphone 11, but to try and ease their current cashflow issues.
For almost a quarter of them, things have become so dire that they’ve have had to get in touch with a Debt Counsellor to investigate the option of entering into a legal Debt Review process.
Is there any end in sight?
From an economic standpoint, things don’t look particularly good. A recent article published on Fin24.com indicates that we are staring down the barrel and heading for a downgrade to junk status.
That means foreign investors are less likely to want to take a punt on South Africa which has a knock-on effect on job creation. Fewer jobs leads to less money in the hands of South Africans who spend less and borrow more.
What are the solutions?
Parliament recently announced that the National Credit Amendment Bill would be signed into law. The Bill aims to expunge the credit agreements of South Africans who are earning less than R7500 per month and have unsecured debt to the amount of R50 000.
That’s a good start. Not the best news if you’ve been handing out credit agreements to people earning less than R90 000 per year.
We recently did a post on this which you might want to look at.
What about anyone earning more than R7500 per month?
Your options are limited.
You either need to try and find a way out of the debt trap you find yourself in. Or, you can consider an option 25% of our survey participants looked into – Debt Counselling.
Until next time.
The Moneyshop Team