Interest rates, inflation fuelling middle-class debt crisis - DebtBusters
Persistently high interest rates, inflation, and stagnant salaries continue to chip away at the disposable incomes of South African consumers.
According to the latest DebtBusters 2024 debt index, higher-income earners use credit to mitigate this impact.
"To those taking home R20,000 or more, their debt-to-income ratio is about 127%, and those taking home R35,000 or more for those the same ratio is 172%. Now, if you compare these two with the average of all the income groups, which is about 107%, you can see that those groups are under a huge financial strain,” says Head of DebtBusters, Benay Sager.
He says while there has been an improvement in the overall debt levels and consistent monthly repayment trends, especially among women in their 40s, the debt-service burden is still high.
ALSO READ: SARB warns inflation risks remain
The average consumer who is under debt-counselling is using 62% of net income to repay what they owe.
"It seems like the ones on the lowest and the highest and different income groups are probably needing around 70% of their take-home pay to service their debt on a monthly basis, which is not good, and the ones in the middle are a little bit more relieved.
“So compared to about a year ago, it’s a little bit more positive in terms of the burden of debt on people, and we're pleased that a lot of people are taking action to deal with it."
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