South Africans’ finances benefited from the two-pot retirement system and successive interest rate cuts in the first quarter of 2026, though global events are now driving core inflation and raising the prospect of future rate increases.
On the 10th anniversary of the Debt Index, Benay Sager, executive head of DebtBusters, notes that while interest in debt counselling was slightly muted during the quarter, a 23% increase in online debt management tool subscriptions indicates that consumers are still experiencing underlying financial stress. Debt burdens remain elevated, and income growth is not keeping pace with rising costs.
Consumers who applied for debt counselling during the quarter needed 64% of their take-home pay to service debt. While this is an improvement from the peak of 73% in Q1 2021 and is trending downwards, it remains high. For top earners — those taking home over R50,000 a month — the figure reaches 101%, with a debt-to-income ratio of 303%, the highest of all income bands.
Since 2021, income has broadly kept pace with average CPI growth of 27%, but Sager says this headline figure masks a deeply uneven picture. Income gains have been concentrated in higher income bands, while lower earners have seen little or no real improvement since 2016.
Consumers have increasingly turned to unsecured credit to bridge the gap. During the quarter, 96% of debt counselling applicants had a personal loan, and 61% had a one-month or payday loan — both record numbers. The average number of credit agreements per applicant reached 8.5, the highest level since 2017, highlighting the growing role multi-lender relationships are playing in consumer finances.
Average unsecured debt levels are 23% higher than in 2021. For those taking home R50,000 or more, the figure is 99% higher, double the 2021 levels. This far outpaces both inflation at 27% and salary growth of 6% for this income band, indicating that top earners are under acute financial stress.
While top earners’ debt has grown by 42% since 2021, exceeding inflation, lower-income earners have seen total debt decline by up to 25%. The reduction, however, is due to less access to credit rather than improved financial health. Sager notes that unsecured loans are being granted to a smaller group of consumers, highlighting that risk is being concentrated in an even narrower segment.
Interest rates on credit agreements have continued to ease in line with the Reserve Bank’s rate reductions. The average unsecured credit rate is now 17.9% per annum, but the median is 20.3%, indicating the range of interest rates consumers are charged on unsecured debt. The average interest rate for vehicle finance is 13.6% per annum, while for home loans it is 10.2%. The share of home loan debt has fallen from 30% in Q2 2023 to 20% in Q1 2026, reflecting the impact of the interest rate cuts that took place from Q3 2024 to Q4 2025.
Higher-income earners carry a larger proportion of secured debt, but middle-income earners — those earning between R10,000 and R20,000 a month — feel the pressure of vehicle loans most acutely. This group, the backbone of South Africa’s working population, spends almost a third of its disposable income on food, leaving almost nothing for insurance, savings or emergencies. Almost all consumers spend roughly 10% of disposable income on transport, about 9% on utilities, and about 4% on cell phone charges.
Sager says people born after 2000 now comprise 9% of new debt counselling applicants, signalling that financial stress is beginning to affect a new generation earlier in their adult lives. On a more positive note, the number of consumers completing 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 programmes. Subscriptions to online debt management tools have grown by 23% in the past year, particularly among younger people.