62c of every rand South Africans earn goes towards paying debt.
Image: Nicola Barts | Pexels
South Africans are increasingly turning to credit and debt counselling as rising living costs strain household finances and leave fewer people able to absorb financial shocks.
Applications for debt counselling in April are already significantly higher than a year earlier, according to National Debt Counselling Association chairperson René Moonsamy.
“The reality is that we’re going to see people borrowing more,” she said.
Faced with mounting costs, many consumers are relying on a mix of credit, dipping into retirement savings through the two-pot system, or seeking formal debt restructuring to manage repayments and secure protection from creditors.
This reflects a broader deterioration in household finances.
Research by specialist loan provider Direct Axis shows that 28% of South Africans are applying for personal loans to cover emergency expenses, 20% to fund home renovations, and 11% for education.
These loans, which typically range from R8,000 to R350,000, must be repaid with interest over time, adding to financial pressure if not carefully managed, with the South African Reserve Bank putting the debt-to-income ratio at 62% - 0.62c out of every R1 that people take home goes to paying debt.
Financial vulnerability is no longer limited to lower-income groups.
Nearly 29% of emerging high-income earners have no emergency savings, suggesting that even relatively affluent households are struggling to build financial buffers.
Moonsamy said credit itself is not inherently problematic but becomes risky when it is unaffordable or poorly managed. “Credit is neutral. What matters is what it is used for, how much it costs, and whether the consumer can afford it,” she said.
Productive borrowing – such as financing education, transport or home improvements – can support long-term financial stability.
However, using credit to fund day-to-day expenses or to repay existing debt can trap consumers in a cycle of rising obligations, says National Debt Counselling Association.
Financial stress is spilling into the workplace, affecting productivity, attendance and staff retention. According to Wealthbit’s 2026 Employee Benefits Report, financially stressed employees are more likely to miss work, be distracted on the job or look for new employment opportunities.
A separate survey by PwC found that financially stressed employees take four more sick days a year than their peers, while presenteeism – where employees are physically present but not fully productive – can result in a loss of more than 27 working days annually.
Wealthbit estimates that the cost of financial stress to businesses could be as high as R250 billion a year.
Alex Cook, chief executive of Wealthbit, said financial pressure is increasingly becoming a business risk. “Money is one of the biggest sources of stress in people’s lives. When money turns into cognitive load, it shows up at work in productivity, in focus, and eventually it becomes a retention risk,” he said.
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