South Africa’s credit market has shown a rare sign of improvement, with default rates down 14% year-on-year, according to Experian’s latest consumer default index (CDI).
While this appears encouraging on the surface, experts warn the picture is far more complex and potentially misleading.
Jaco van Jaarsveldt, chief strategy and innovation officer at Experian, said the improvement is largely driven by stricter lending practices, rather than a meaningful recovery in household finances.
Read more: Credit access now possible for small businesses through Experian’s new AI offerings
“Consumers are still under pressure.” He added that demand for credit remains well above pre-Covid levels, a strong indication that many households are using credit to cover everyday expenses.
As festive-season spending fades and repayment realities set in, 2026 could expose hidden financial strain.
Historically, default rates often rise in the first half of the year as holiday purchases begin to weigh on household budgets. This makes early, disciplined credit management essential.
One of the most important steps consumers can take is understanding their financial starting point. Regularly checking a credit score allows individuals to track changes, identify risks, and see how financial behaviour affects their overall profile.
Van Jaarsveldt also highlights a concerning trend among financially stable households. “Even higher-income groups are increasing their use of credit cards and accessing higher limits, suggesting that credit is being relied on to manage living costs.”
Also read: TransUnion Africa billboard brings credit lessons to life
This creates vulnerability, particularly when promotional spending and high-interest debt begin to compound.
Van Jaarsveldt stresses the importance of effective credit control in 2026. “Creating a realistic budget, avoiding unnecessary borrowing, and prioritising high-interest debt repayment can significantly reduce financial pressure.
Consumers are also encouraged to reflect on their past year’s spending habits and set achievable goals, such as reducing debt, improving payment history, or building emergency savings.”
He added that, for those with lower credit scores, accessing credit often means higher interest rates and stricter terms. “While these loans can provide short-term relief, they carry long-term risks. Consistent, responsible repayment behaviour can steadily improve a credit profile, opening the door to better financial products over time.”
With proactive planning and disciplined habits, South Africans can strengthen their financial resilience. Making smarter credit choices now could mean facing the rest of 2026 with greater confidence, stability, and peace of mind.
Follow us on our WhatsApp channel, Facebook, X, Instagram and TikTok for the latest updates and inspiration!
