South Africans enter festive season with record debt levels, DebtBusters Index shows

South Africans are heading into the festive season under the heaviest financial strain seen in nearly a decade, according to the DebtBusters Q3 2025 Debt Index, released on Tuesday.

The report shows that 95% of people who applied for debt counselling in the third quarter relied on a personal loan, while 22% used overdraft facilities regularly — the highest levels ever recorded.

Benay Sager, executive head of DebtBusters, said the results confirm a troubling deterioration in households’ financial resilience.

“Those who applied for debt counselling are now using an unsustainable 70% of their take-home pay to service debt – which is the highest level recorded in the last eight years,” he said.

Sager added that successive interest rate and petrol price reductions have helped consumers better deal with debt; however, finances are still seriously strained.

“Over the past nine years, income growth has not kept up with significant cost increases, and consumers are using short-term unsecured credit and personal loans to make up the shortfall," he said.

"Of those who apply for debt counselling, 95% have a personal loan, and 57% have a payday loan. A further 22% use overdraft facilities regularly. Vehicle debt also seems to be increasing and is now making up a substantial portion of the incoming client cohort debt.”

Sager said that demand for online debt management grew by 47% compared to the same period last year.

“Other findings from the Q3 2025 Debt Index are that, compared to 2016, consumers who applied for debt counselling had: a high debt-service burden. Before coming to debt counselling, consumers were spending 70% of their net income to repay debt. This is the highest since 2017," Sager said. 

"People taking home R35 000 a month use 78% of their income to repay debt, and their total debt-to-net-income ratio is 189%. The most vulnerable consumers, who earn R5 000 or less a month, use 92% of their income for debt repayments. These ratios are at their highest-ever levels."

Debt Rescue CEO Neil Roets warned that many households are entering the most financially demanding period of the year with “almost no buffer at all.”

 “The interest rate cuts have helped at the margins, but not nearly enough to turn the tide for households whose incomes have been swallowed by years of rising living costs and shrinking purchasing power," he said.

Roets added that the reality they are seeing daily is that consumers are entering the festive period with almost no financial buffer.

“Many are already using unsecured credit, such as personal loans, payday loans, store accounts and overdrafts, simply to cover basic expenses. This is extremely worrying because when households rely on high-interest short-term credit to survive during a normal month, December spending patterns can push them into a full-blown crisis.”

Roets said that the festive season is the most financially vulnerable period of the year.

“There is enormous social pressure to spend: gifts, food for family gatherings, travel costs, school uniforms and stationery for January, and endless retail promotions urging consumers to “buy now.” For someone already under strain, these pressures can easily lead to taking on even more unsecured debt.”

Professor Waldo Krugell, an economist at North-West University, said that while private sector credit extension has accelerated in recent months, overall household debt as a percentage of disposable income has actually declined slightly due to stronger income growth.

“Household debt as a percentage of nominal disposable income decreased slightly to 62.4% in the second quarter, as households’ disposable income increased at a faster pace than their debt.”

"The season will be a difficult time to consolidate their finances. We are all stretched by some extra spending at this time, but these households cannot afford it. The solution for specific households is to try to live within their means. For the macroeconomy, it is of course faster economic growth. If the economy grows, real incomes can grow.”

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