Personal Finance Financial Planning

Tight month, tough choices: how to avoid risky credit decisions in 'Janu-worry'

Craig Whittaker|Published

January is one of the toughest months financially. School fees, back-to-school and work essentials, and monthly transport costs, must often be paid before households have recovered from December spending.

Image: Pexels.

January is one of the toughest months financially. School fees, back-to-school and work essentials, and monthly transport costs, must often be paid before households have recovered from December spending. Even careful, financially literate consumers can find themselves under pressure.

This pressure shows up in the data. Reporting on the formal lending sector in Q1: 2025, TransUnion stats show that credit card originations jumped by around 30% year-on-year, and non-bank personal loans showed their highest serious delinquency rate in over three years, with 41.3% of borrowers at least three months behind on repayments.

These figures aren’t about poor money habits. They reflect a reality where wages struggle to keep pace with the rising cost of living. And they only tell part of the story. In South Africa, informal lending remains widespread, often exposing vulnerable consumers to far greater risk.

Credit can be helpful when it’s used responsibly. The danger is borrowing in a rush, without understanding the long-term cost.

If you’re considering taking out a loan, here’s what you should understand first:

  1. Avoid informal lenders: Informal lenders may offer quick cash, but they often charge excessive interest and use illegal collection practices. In contrast, registered credit providers comply with the National Credit Act, which exists to protect you. A registered lender will have an NCR number on all its agreements and communication.
  2. Read the Ts and Cs: These explain interest rates, fees, and repayment rules, and not understanding them can lead to extra costs later. A responsible lender will always provide clear Ts and Cs upfront.
  3. Understand your Pre-Agreement Statement and Quotation (PAQ): Before accepting a loan, you should receive a PAQ. This outlines the proposed loan amount, interest rate, fees, and repayment terms. It also protects you because it helps ensure that a loan is affordable in your unique circumstances. 
  4. Look at the full cost: This includes interest, initiation fees, and admin charges. Compare the full amount against your monthly budget to see if it’s realistic. To reduce the risk of borrowing more than you can manage, a responsible lender will start with a smaller loan amount and increase it gradually as you show good repayment behaviour. 
  5. Understand arrears… and communicate: If you miss payments, you may be charged interest on the arrears. The most important step is to talk to your credit provider early. “Life happens,” Whittaker says. “Staying in touch can prevent a temporary setback from becoming a long-term problem.” In the same vein, if a credit agreement changes, the lender must notify you. It’s important to keep your contact details updated and read all messages carefully. And, before you take out credit, make sure the provider is easy to reach and offers instant support.

Janu-worry doesn’t mean you’ve failed financially. Used carefully, credit can be a short-term support rather than a lasting burden. The key is knowing when to use it, and to only borrow from registered credit providers so you're protected along the way.

* Whittaker is the chief operating officer at digital financial services platform Finchoice.

PERSONAL FINANCE