Debt levels in South Africa are at an all-time high.

Debt levels in South Africa are at an all-time high.

That’s right; according to the most recent DebtBusters data, Business Tech says that South Africa’s debt levels have reached alarmingly high levels.

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As we previously discussed in our article on the risk of personal loans, the aforementioned has emerged as a lifeline to help many South Africans, even those with high incomes, manage their debt levels.

Debt levels in South Africa are at an all-time high. Image: File.

Debt counseling enquiries increased by 43% in Q2 of 2023, according to DebtBusters data. Compared to the same time previous year, online debt management surged by 99%. Benay Sager, the CEO of DebtBusters, claims that loan activity has increased along with interest rates.

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According to Sager, “consumers continue to supplement their income with unsecured credit, and personal loans have become a lifeline for many.” The average loan size has increased by 78% since 2016, and nearly all consumers (95%) who applied for debt counseling in Q2 2023 had a personal loan.

Debt levels in South Africa are at an all-time high. Image: File.

According to data from DebtBuster, South Africans are using almost two-thirds, or 66%, of their income to pay off debt. This ratio is at its highest point in history. It’s interesting to note that South Africans of all income levels, from low to high, have extremely high debt levels.

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Your debt-to-income (DTI) ratio is the difference between your monthly income and expenses. Your DTI ratio should not exceed 43%, according to experts. The overall debt to annual net income ratio in South Africa is currently 121%, according to DebtBusters. That’s much above average.

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The results of DebtBusters also mention declining buying power brought on by South Africa’s high levels of debt. In the past six years, incomes have barely expanded by 1% while inflation has increased by 39%. This implies that you actually earn 38% less today than you did in 2016.
Very spooky. Are you experiencing a lack of purchasing power and high inflation with your family? What steps have you made to cut expenses around the house? Please feel free to share with our audience in the box below the comments.

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