A debt index for the first quarter of the year shows that consumers are still battling to pay their debts while their incomes remain stagnant. In addition, persistently high interest rates and inflation, especially food inflation, continue to erode their disposable income, while a lack of any meaningful economic growth is constraining salaries.
The quarterly analysis of data from debt-counselling applicants also found that demand for debt management increased, with debt-counselling enquiries rising by 22% and the use of online management services up by 30% compared to the same period last year, Benay Sager, executive head of DebtBusters, says.
Compared to the same period in 2016, when DebtBusters first began analysing the data, the Debt Index for the first quarter of 2024 found: The debt-service burden is high, with the average debt-counselling applicant using 62% of their net income to repay debt. The situation is worse among higher income earners. The debt-to-income ratio for people taking home more than R20 000 per month is 127%, while it is 172% for those earning R35 000 or more. These ratios are at or close to the highest ever.
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