Debt management increased by 6% in Q3, says DebtBusters
This is despite improved consumer sentiment, a six-month reprieve in load shedding, cooler inflation and the start to the interest rate cutting cycle.
Couple working on finances, household budget. Pexels/Ron Lach
JOHANNESBURG - More cash-strapped consumers turned to debt management in the third quarter of the year, as household expenses continue to outweigh income.
During this period, debt management company, DebtBusters, said the demand for debt management increased by 6% compared to the same period last year.
This is despite improved consumer sentiment, a six-month reprieve in load shedding, cooler inflation and the start to the interest rate-cutting cycle.
DebtBusters said that income growth had not kept up with significant expenses.
In the past eight years, electricity tariffs have increased by 135%, petrol prices have doubled and inflation has bitten.
Executive head at DebtBusters, Benay Sager, said as a result, consumers who applied for debt counselling in the third quarter needed more than 60% of their take home pay to service their debt expenses.
"But I think more alarmingly for us is that the people at the top-end need 72% of their take home to service their debt and the ones at the lower end, which are even more vulnerable, they need to spend 75% of their take home pay for their debt repayments. And I think, as you can imagine, both of these things are not sustainable."
He said that the number of consumers who had successfully completed debt counselling has increased nine-fold since 2016.
In the third quarter of this year alone, more than R665 million worth of debt has been paid back to creditors as part of the debt counselling process.