DebtSafe Blog

South African Consumers Regret Taking Out Credit

Whether South Africans make extra debt just to get by or whether they take out credit to upkeep various responsibilities and lifestyles, credit is indeed a reality for many consumers. Not to even mention possible credit splurges that are still on the way this 2018 silly season.

So, it is easy to imagine that consumers could borrow before they think, recklessly adding credit without giving it a second thought and living with that regret for years to come.

The latest available Consumer Credit Market Report from the National Credit Regulator indicates that the total value of new credit granted (to consumers) increased with ten billion rand for the quarter ended June 2018. And, the number of credit applications (from consumers) augmented with 5.79% for the second quarter. Recent feedback and statistics from the DebtSafe Credit Savvy survey (with a total of 1070 respondents that completed the study), however, highlight that 56% of the respondents (aka South African consumers) actually regret taking out credit.

Here are additional statistics (and feedback) that also stand out from the recent survey:

  • Consumers’ overall reasons for taking out credit: 37% indicate that living expenses need to be covered and 21% consider obtaining credit to pay for school fees, while 21% are thinking about buying a new vehicle.
  • Respondents’ kind of credit mostly consists of unsecured debt: 31% have credit card debt and 44% have personal loans.
  • A total of 27% respondents indicate that they have previously taken out credit knowing they might not be able to afford their upcoming monthly repayments.
  • And, even though consumers should know by now that they ought to be accountable credit users – not taking out credit or debt that they cannot afford – the temptation is unfortunately real. Fifty-five percent say they receive either ONE phone call, email or SMS from credit providers (offering extra credit), per day. BUT whatever the situation, it continues to be the duty of the consumer to ‘handle’ credit in a responsible manner.

Consumers have to realise – credit is not necessarily a bad thing, BUT how they manage their debt and credit obligations do, however, make it either a very bad or extremely good situation.

When consumers take out credit, it goes hand in hand with great responsibility and the proper personal management thereof – note first and foremost on the consumers’ part.  And, if this is NOT the case, consumers can consider themselves to be so-called ‘reckless borrowers’ – a stigma and reputation that should rather be avoided.

What should consumers, therefore, then take into account when it comes to credit and ‘reckless borrowing’?

  • They have to be sure that when they apply for credit that they can indeed afford it. They can do their necessary research regarding products beforehand, and shop around for better prices if deemed necessary.
  • And, they have to always keep in mind that they need to disclose all the information needed for credit providers to do proper affordability assessments.

Credit plays a major role in consumers’ financial situations these days. And, how consumers manage their debt can either break them to be ‘reckless borrowers’ or build them up to be ‘credit savvy’ consumers. It is time for consumers to be done with disruptive financial choices and regret. In worse case scenarios if consumers are already severely indebted, they are welcome to explore the Debt Consolidation route as an alternative to get rid of their current debt burdens.