South Africans drowning in debt despite renewed optimism about economy

The latest Debt Index from personal debt management company DebtBusters makes for worrying reading, also containing seemingly contradictory information.

It shows that more South Africans than ever before are using personal loans to make up the shortfall between income and the rising cost of living.

Record numbers of consumers now rely on high-interest personal loans to make ends meet, according to the Debt Index for the fourth quarter of 2025.

96% had a personal loan, and 59% a one-month payday loan – another record.

While falling inflation and interest rate cuts did ease pressure on consumers, pressure has in reality been building for the past decade, DebtBusters executive head Benay Sager pointed out.

"(During the past ten years) Electricity tariffs have increased by 165%, petrol by 74%, and the compound effect of inflation is 49%. By contrast, income growth has lagged considerably."

“The result is that consumers who applied for debt counselling in Q4 2025 needed 71% of their take-home pay to service their debt – the highest level we’ve seen since 2017.”

In conversation with Stephen Grootes, Sager points to the truism that two things can be true at the same time.

RELATED:

• SA civil contractor confidence hits highest level since 2016
• IMF upgrades SA’s growth outlook to 1.4%: 'Positive but nowhere near growth we need' says economist
• Consumer confidence rises in Q4, signalling a festive season boon for retailers

DebtBusters has noted that the current wave of optimism about the future does hold when you look at consumer expenditures.

And perhaps that is part of the clue, Sager says.

"In our business we help restructure people's debt in terms of giving them a longer runway and the headroom to pay it back, so what we're seeing is of course also the byproduct of that."

"While a lot of people HAVE received relief, particularly with interest rate cuts - those with asset base, there are also many who've borrowed money without that asset protection particularly with unsecured debt and I think we're seeing some of that come to fruition now."

For more detail, scroll up to the audio player and listen to the conversation with the DebtBusters chief