Debt in South Africa – Eighty20 XDS Credit Stress Report 2025 Q1

Debt in South Africa

A recent report from Eighty20 and XDS, released in early 2025, gives us a clear look at debt across the country.

The Big Picture on Debt

The total amount South Africans owe on loans grew by 2.1% from the last quarter, reaching R2.56 trillion. But the amount of overdue payments—money people couldn’t pay on time—went up by 4%, hitting R208 billion. This increase came mostly from unsecured loans (like personal loans not tied to an asset), where overdue payments rose by R3.2 billion, credit cards (up R2.3 billion), and smaller increases in home loans and vehicle loans (each up by about R1 billion).

More Loans Are Falling Behind

The number of loans that are overdue increased by 353,395, totaling 17.97 million. Now, 34.8% of all loans are in arrears (behind on payments), up slightly from 34.7% last quarter. This is the first time in two years we’ve seen this number go up instead of down. On the positive side, loans in good standing (where payments are on track) also increased by 473,667, a 1.4% rise.

How Different Groups Are Doing

The report splits South Africans into groups based on their financial situation. Here’s what’s happening:

• Mass Credit Market (Everyday Workers): This group includes many of our consumers. About 325,000 people here started using credit for the first time, taking out 380,000 loans—mostly retail loans (like store credit for clothes or furniture). They also took out 1.7 million new loans, almost all unsecured. Credit card overdue payments in this group jumped by 9.7, and 53% of them are in default (failing to pay entirely).
• Middle Class Workers: This group took out 1 million new loans, mostly unsecured (734,081). Their overdue payments went up by 3.4%, mainly due to a 2% rise in overdue unsecured loans and a 5% rise in credit card overdue payments.
• Heavy Hitters (High Earners): Their total loan balance is R1.7 trillion, with home loans making up R996 billion. Overdue home loan payments increased by 5.8% to R11.3 billion.
• Comfortable Retirees: They have 4.4 million open loans, with a total balance of R204 billion. They took out 163,997 new loans, mostly unsecured, but overdue payments grew by 3.4% to R19.6 billion.

How Many Are Struggling?

While the number of South Africans using credit grew by 2% from last year, overdue payments rose much faster—by 14%, reaching R208 billion. The percentage of people with at least one defaulted loan dropped to 41.6%, which is good news, but the slight rise in loans in arrears (34.8%) is a concern. The Mass Market has the most people in default (over 50%), while Heavy Hitters and Comfortable Retirees are doing better. If you’re in the Mass Market, know that you’re not alone—many are in the same boat, and your debt counsellor is there to help. And if you are looking for a Debt Counsellor , we have list for you of DCASA Members https://www.dcasa.co.za/debt-counsellor-near-me/

How Much Income Goes to Debt?

On average, South Africans spend 28% of their monthly income on loan payments. For Heavy Hitters, it’s 48%, Middle Class Workers 37%, Comfortable Retirees 21%, and the Mass Market 19%. This shows how much debt can eat into your budget. If you are struggling with your debt and might be over indebted, Debt counselling helps by restructuring your payments to make them more manageable, so you’re not losing such a big chunk of your income.

New People Taking on Credit

This quarter, 705,161 people started using credit for the first time, but they’re borrowing less than before. New retail accounts dropped by 12% to 446,191, and new unsecured loans fell by 15% to 252,629.

What This Means

South Africa faces a significant debt crisis, with personal debt exceeding R2.5 trillion and a household debt-to-income ratio of around 65%, with some spending up to 75-80% of their income on debt repayment. This trend is driven by high interest rates, rising living costs, and unemployment, pushing many into over-indebtedness. Debt counselling, introduced under the National Credit Act of 2007, offers a structured solution for consumers struggling to manage debt. Based on recent insights, here’s advice for South African consumers:

Assess Your Financial Situation Early: If debt payments are overwhelming or you’re borrowing to pay off existing loans, act quickly. Obtain a free credit report from agencies like TransUnion or Experian to understand your credit score and debt status. Early intervention prevents deeper financial distress, such as asset repossession.

Seek Registered Debt Counsellors: Work with National Credit Regulator (NCR)-registered debt counsellors who are also registered with an Association. These professionals assess your income, expenses, and debts to determine if you’re over-indebted and eligible for debt review. They negotiate with creditors to lower interest rates and monthly payments, creating an affordable repayment plan.

Understand Debt Counselling Benefits & Disadvantages: Debt review restructures payments to fit your budget, protects assets like homes and cars from repossession, and shields you from legal action by creditors. It consolidates multiple debts into one manageable payment, freeing up cash for essentials. The process also includes financial education to prevent future debt traps. On average, it takes 3-5 years to complete, after which you receive a clearance certificate, allowing you to rebuild your credit score.

Avoid Unregistered Counsellors and Scams: Be cautious of unregistered practitioners or those promising instant debt clearance or upfront payments. Verify a counsellor’s NCR registration and ensure they use approved payment systems like a PDA and ensure you thoroughly check out their reviews before giving out any personal information. Don’t sign anything without receiving proper information on the process.

Adopt Better Financial Habits: Use debt counselling as a chance to learn budgeting and financial management. Avoid new credit during the process, as your credit profile will be flagged, restricting access until completion. Post-review, maintain disciplined spending to rebuild your financial health.

Debt counselling is a proven lifeline, with over 717,495 South Africans currently under review, repaying R1.25 billion monthly. It’s a regulated, effective way to manage debt while protecting your assets and mental well-being.

Source: Eighty20_XDS_Credit_Stress_Report_2025_Q1