Despite recent relief from lower interest rates and access to retirement savings, South African households are still grappling with high debt levels, as revealed by the latest DebtBusters Debt Index.
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South African households received some relief at the start of 2026 as lower interest rates and access to retirement savings through the two-pot system eased financial pressure. But beneath the reprieve, debt levels remain dangerously high, with many consumers increasingly reliant on unsecured credit to survive.
This is according to the latest DebtBusters Debt Index, which marks its 10th anniversary this year and paints a picture of households still struggling to keep pace with the rising cost of living.
According to the report, consumers who applied for debt counselling in the first quarter of 2026 needed 64% of their take-home pay to service debt. Although this is an improvement from the peak of 73% recorded in the first quarter of 2021, it still reflects severe financial strain among indebted households.
Benay Sager, executive head of DebtBusters, said the pressure on consumers remains significant despite recent relief measures.
“What remains consistent is that debt burdens are elevated, and income growth is not keeping pace with rising costs,” Sager notes.
The Debt Index shows that South Africans are increasingly turning to short-term and unsecured credit to make ends meet. During the quarter, 96% of debt counselling applicants had a personal loan, while 61% had a one-month or payday loan, both record highs.
The average number of credit agreements per applicant climbed to 8.5, the highest level recorded since 2017, suggesting consumers are relying on multiple lenders to cover monthly expenses.
Top earners are under some of the greatest pressure. Consumers earning more than R50,000 a month are now spending 101% of their take-home pay servicing debt, while their debt-to-income ratio has climbed to 303% — the highest among all income groups.
Average unsecured debt levels are now 23% higher than in 2021. Among higher earners, unsecured debt has surged by 99% over the same period, far exceeding inflation and salary growth.
While incomes have broadly tracked inflation since 2021, Sager said the gains have not been evenly distributed.
“Unsecured loans are being granted to a smaller group of consumers, highlighting that risk is being concentrated in an even smaller group,” says Sager.
The findings align with broader data from the National Credit Regulator, which has repeatedly warned about growing dependence on unsecured lending. The regulator’s latest Consumer Credit Market Report showed that unsecured credit remains one of the fastest-growing segments of the lending market, particularly among financially stressed consumers. Household debt as a percentage of disposable income also remains elevated in South Africa, despite some moderation in interest rates.
Meanwhile, the South African Reserve Bank has cautioned that global uncertainty, higher fuel prices and inflationary risks could complicate the interest rate outlook in the coming months. While rates were reduced between late 2024 and 2025, economists have warned that renewed inflation pressures linked to global trade disruptions and commodity prices may limit further cuts or even force future increases.
The DebtBusters report found that lower- and middle-income households remain particularly vulnerable. Consumers earning between R10,000 and R20,000 a month spend almost a third of their disposable income on food alone, leaving little room for savings, insurance or emergencies.
“Interestingly, almost all consumers spend roughly 10% of disposable income on transport, about 9% on utilities, and about 4% on cell phone charges,” he says.
Interest rates on debt products have eased alongside the Reserve Bank’s earlier rate cuts. The average interest rate on unsecured credit now stands at 17.9% a year, although the median rate is significantly higher at 20.3%.
Vehicle finance averages 13.6%, while home loans average 10.2%.
The report also points to growing financial distress among younger South Africans. Consumers born after 2000 now account for 9% of new debt counselling applicants, suggesting that financial pressure is affecting people far earlier in adulthood.
At the same time, there are signs that more consumers are seeking help before their financial situation deteriorates completely.
“The good news is that the number of consumers who complete debt counselling is 14 times what it was a decade ago, with these consumers paying more than R560 million back to creditors during their debt counselling programme.
“Another positive development is that interest in online debt management tools, particularly among younger people, remains strong. Subscriptions have grown by 23% in the past year,” Sager notes.
The findings come as many South Africans continue to grapple with stagnant wage growth, rising living costs, and economic uncertainty. Although the two-pot retirement system and lower borrowing costs provided temporary breathing room, the Debt Index suggests many households remain one financial shock away from deeper distress.
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