Januworry is here: How to avoid debt traps

With Januworry upon us, the Credit Association of South Africa (CASA) has urged consumers to make careful, responsible credit decisions.

It cautions South Africans to only borrow from providers legally registered with the National Credit Regulator (NCR).

“This time of year typically places additional strain on household budgets,” stated CASA CEO Leonie van Pletzen. “Factors such as gifting, travel, social events, January ‘back-to-school’ costs, and family commitments can tempt consumers to take on debt they cannot afford.”

The scale of festive spending is significant.

Short-term lender Wonga’s eighth annual Summer Spending Survey of more than 10,000 South Africans found that 70% expect to spend more than usual this festive season, planning an average spend of R6,299.

Van Pletzen warned that poor decisions made over this period often lead to severe financial pressure early in the new year.

“Credit can be a helpful tool, but only if used responsibly through registered providers who comply with the law and prioritise the protection of consumers,” she explained.

“Informal or illegal lending continues to target vulnerable households over this period, making awareness and accountable decision-making more important than ever.”

To protect financial well-being, van Pletzen offered seven expert tips for the festive season:

1. Set a realistic budget – plan for fuel, school fees, and January essentials. Only spend what you can genuinely afford.
2. Only borrow if you can afford to repay it – calculate your monthly repayment and ensure it fits comfortably into your budget after covering essential living costs.
3. Borrow only from NCR-registered credit providers – ask for the provider’s NCRCP number and verify it with the NCR.
4. Use your bonus or 13th cheque smartly – pay off existing debt, boost savings, or prepare for January expenses.
5. Prioritise essential expenses first – household bills, school fees, transport, and food should come before additional spending.
6. Read and understand your credit agreement – know the full interest rate, fees, repayment dates, and penalties for late or missed payments. Never sign a contract you do not fully understand.
7. Protect personal documents and banking information – a legal credit provider will never ask to keep your ID, bank card, PIN, or South African Social Security Agency card. If this is requested, walk away immediately.

Financial experts say planning early is key. Shiree Coetzer, financial adviser at Alexforbes, said the festive period can intensify spending pressure.

With bonuses often mentally spent before they arrive and earlier-than-usual paydays in December, “you end up with a December-to-January stretch that feels more like 199 days than a few weeks.”

Coetzer added that monthly budgets must include January’s obligations as “consistent monthly budgeting” is important.

Hayley Parry, Worth's head of education and co-founder, highlighted another common consequence of overspending, as this often leads to people allowing “their debit orders to bounce because there’s not enough money in their accounts”.

Wonga’s research also showed that almost a quarter of South Africans planned ahead and saved throughout the year for festive costs.

This is slightly up from 26% in 2024 but still below the pre-pandemic record of 42% in 2019, indicating that many consumers have yet to regain full confidence in their financial planning.

“We encourage all South Africans to stay alert, protect themselves, and avoid the traps of illegal and informal lending,” urged van Pletzen. “Borrow only when necessary, only what you can afford, and only from providers who operate within the legal framework.”

Van Pletzen adds that “your financial well-being in January and beyond depends on the decisions you make now”.

IOL BUSINESS

Get your news on the go. Download the latest IOL App for Android and IOS now.