Starting each month financially on the back foot
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A report by DebtBusters found that South Africa’s debt crisis is worsening, with people earning R50 000 and more per month needing more than their salary to cover debt repayments.
The report, Debt Index, released on Tuesday, covers the second quarter of 2026, and shows that people who applied for debt counselling needed 64% of their salary to service debt. While this is an improvement from the previous quarters, Benay Sager, Executive Head of DebtBusters said it is still “extremely elevated”.
DebtBusters is a debt management and counselling company. The Debt Index is a quarterly data-driven report that analyses financial trends and debt levels of South Africans applying for debt counselling.
Top earners in deep debt crisis
The report revealed that while the total amount of money South Africans need to service their debt has improved, things have worsened for the country’s top earners.
People earning more than R50 000 per month need more than their full salary to service debt, starting each month financially on the back foot, according to the index.
“The total debt to annual net income ratio is 307%, and they need 103% of their take-home pay every month to service their debt repayments,” reads the index.
Debt repayment to net income ratio
The debt index also showed that the more people earn, the more money they need to service their debt.
South Africans earning between R35 000 and R50 000 per month need at least 90% of their salary for debt repayments; those earning between R20 000 and R35 000 need 69% of their salary; those earning between R10 000 and R20 000 need 58%; and those earning less than R10 000 need 64%.
The report detailed that top earners’ unsecured debt levels is 84% higher, outpacing both inflation (29%) and salary growth (7%) for that group.
Total debt tells a tale of two halves: top earners’ total debt has grown 82% since same period in 2021, exceeding inflation, while lower income earners have seen their total debt shrink by up to 23% – a reflection of reduced access to credit rather than improved financial health.
Cost-of-living growing faster than CPI
Sager noted that since 2021, income growth has broadly kept pace with consumer price inflation, which averaged 29%, but many income bands have seen little to no real improvement.
He said individual cost-of-living components have moved even faster than CPI: petrol prices are up 52% since 2021 and electricity tariffs are up 101%, both far outpacing the 23% average income growth over the same period.
“Against this backdrop, consumers have increasingly turned to unsecured credit to bridge the gap: 96% of new applicants have a personal loan at the time of application, while 63% now carry a one-month (payday) loan – a record.
“The average number of credit agreements per new applicant has reached 8.7, its highest level since 2016, pointing to a renewed wave of multi-lender borrowing.”
Interest rates ease
Sager noted that interest rates on incoming clients’ credit agreements have continued to ease in line with the South African Reserve Bank (Sarb) repo rate cuts.
The average unsecured debt interest rate stands at 19.6% p.a, a slight increase but still below its peak – vehicle finance averages 14% p.a. and home loans 10.4% p.a. Unsecured debt includes personal loans, credit cards and store accounts.
The report revealed that the share of home loan debt in the applicant pool has remained at 20%, down from 30% in Q2 2023, reflecting the impact of rate cuts through the third quarter of 2024 to fourth quarter of 2025.
Money goes to food
According to the Debt Index, the R10 000 to R20 000 income group spends almost a third of disposable income on food alone.
The index noted that this group is the backbone of the country’s working population; however, after spending on necessities, the group is left with little to nothing for insurance, savings, or emergencies.
It has been noted with concern that there is a growing rate of South Africans born after 2000 seeking debt counselling, which signals financial stress is beginning to affect South Africans earlier in their adult lives.
“This sentiment was also supported by some of the Money-Stress Tracker findings, with younger generations among those who felt most acute financial stress,” said Sager.
