South Africans who bring home more than R50,000 per month are now spending more than the entirety of their monthly salaries just on servicing their debt obligations – and this is happening even after months of interest rate relief and withdrawals from the two-pot retirement system have helped many households stay financially afloat.
Key Takeaways
- Highest earners are drowning in debt: South Africans earning more than R50 000 per month now need 101% of their take-home pay to service debt, with a debt-to-income ratio of 303% – the highest of any income group.
- Living costs are outrunning income growth: Since 2021, electricity tariffs have jumped 85%, petrol 36%, and inflation 27%, while average take-home pay for debt counselling clients grew by only 25%.
- Unsecured lending dependency is at record levels: A record 96% of debt counselling applicants hold a personal loan, the average person carries 8.5 credit agreements, and unsecured debt for top earners has surged 99% since 2021.
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Debt-to-Income Ratios Reach Record Highs
The latest DebtBusters Debt Index for the first quarter of 2026 has revealed that consumers in the highest income bracket now require a staggering 101% of their net take-home pay simply to meet their monthly debt repayments, while their overall debt-to-income ratio has climbed to an alarming 303% – the highest recorded figure of any income group tracked in the report.
DebtBusters executive head Benay Sager told IOL that people in this income group are, in practice, not actually paying their debt in full each month, because doing so would leave them with nothing whatsoever to cover necessities such as food and water. He explained that the 101% figure represents what repayments would amount to if these consumers were paying exactly what they owe – and this financial impossibility is precisely why so many of them are turning to debt counselling for assistance.
Debt counselling in South Africa is a legal process regulated under the National Credit Act (NCA). A registered debt counsellor can negotiate with creditors on your behalf to restructure your repayments into a single, more manageable monthly payment.
Sager also noted that successive interest rate cuts by the South African Reserve Bank, combined with the newly introduced access to retirement savings through the two-pot pension system, had offered a degree of temporary financial breathing room to many households across the country.
Rising Costs Continue to Outpace Income Growth
However, Sager warned that global inflationary pressures and the growing possibility of future interest rate hikes were once again ratcheting up financial stress for consumers across all income levels.
The report also throws into sharp relief the intensifying squeeze being felt from the rising cost of everyday living. Since 2021, the following increases have been recorded:
- Electricity tariffs have risen by 85%
- Petrol prices have increased by 36%
- General inflation has climbed by 27%
- Average take-home pay for incoming debt counselling clients has grown by only 25%
South Africa’s electricity tariff increases have consistently outpaced inflation for more than a decade, driven primarily by Eskom’s infrastructure debt and the cost of load-shedding mitigation measures. The National Energy Regulator of South Africa (NERSA) approves these increases annually.
Sager stated that what remains consistent is that debt burdens remain elevated, and that income growth is simply not keeping pace with the relentless rise in living costs.
Warning Bells Ahead of Interest Rate Decision
These findings have emerged just days before the South African Reserve Bank’s Monetary Policy Committee (MPC) is scheduled to announce its latest interest rate decision, adding further urgency to the concerns raised in the report.
Economists are increasingly cautioning that higher global oil prices and inflationary pressure linked to ongoing tensions in the Middle East could significantly complicate the prospects for further interest rate reductions in South Africa.
The majority of economists and market watchers currently expect a 25-basis-point rate hike, which would push the prime lending rate up to 10.50%.
Current Average Interest Rates on Credit Products
The following average interest rates were noted by DebtBusters for the first quarter of 2026:
| Credit Product | Average Annual Interest Rate |
|---|---|
| Vehicle Finance | 13.6% |
| Home Loans | 10.2% |
| Unsecured Credit (e.g. credit cards) | 17.9% |
Unsecured credit, such as personal loans and credit cards, carries significantly higher interest rates because lenders take on greater risk without any asset as collateral. In contrast, home loans and vehicle finance are secured against property or a vehicle, which the lender can repossess in the event of default.
Debt Repayments Eating into Salaries
According to DebtBusters, consumers who applied for debt counselling during the first quarter of 2026 required an average of 64% of their take-home pay to service their debt, which is an improvement from the peak of 73% recorded in the first quarter of 2021 – but Sager emphasised that this level remains deeply elevated and is far from sustainable.
Growing Reliance on Unsecured Lending
The report has found that South Africans are increasingly turning to unsecured forms of lending simply to survive from one month to the next. The scale of this dependence is illustrated by the following figures:
- A record 96% of all debt counselling applicants currently hold at least one personal loan
- 61% have taken out a one-month or payday loan
- The average number of credit agreements per applicant has climbed to 8.5 – the highest level since 2017
This rising average number of credit agreements strongly suggests a growing dependence on multiple lenders to plug ongoing cash flow gaps rather than to finance specific purchases or investments.
DebtBusters also found that unsecured debt levels are now 23% higher on average than they were in 2021. For consumers earning more than R50 000 per month, the situation is far more extreme – unsecured debt in this bracket has surged by 99% since 2021, a figure that dramatically outpaces both inflation and salary growth over the same period.
Lower-Income Consumers Face a Different Kind of Pressure
Whilst top earners have seen their debt levels explode upwards, lower-income consumers have been experiencing an entirely different but equally troubling form of financial pressure.
DebtBusters reported that total debt levels for lower-income groups had actually fallen by as much as a quarter – but crucially, this decline is largely not a reflection of improved financial health. Rather, it is the result of consumers losing access to credit altogether, as lenders tighten their criteria in response to elevated default rates.
Under the National Credit Act, lenders are legally obligated to conduct an affordability assessment before granting credit. As economic conditions worsen and more consumers default, banks and lenders become more conservative in their assessments, effectively cutting off access to credit for those who arguably need it most.
For consumers earning between R10 000 and R20 000 per month – a group DebtBusters describes as the backbone of South Africa’s working population – almost a third of all disposable income is now being spent exclusively on food.
Younger South Africans Increasingly Affected
The report has also uncovered a concerning generational shift in financial distress, with debt problems increasingly affecting younger consumers far earlier in their adult lives. Specifically, people born after the year 2000 – individuals who are now 25 years old or younger – now account for 9% of all new debt counselling applicants.
Generation Z consumers in South Africa entered the workforce during or shortly after the COVID-19 pandemic and have faced a labour market characterised by high unemployment, rising costs, and easy access to digital lending platforms and buy-now-pay-later credit products. Financial literacy experts warn that the combination of these factors makes younger consumers particularly vulnerable to over-indebtedness.
Conclusion
South Africa’s debt crisis is deepening across all income levels, but the data from DebtBusters paints a particularly stark picture for both ends of the earnings spectrum – high earners are buckling under the weight of runaway unsecured debt, while lower-income consumers are quietly losing access to credit altogether. With living costs continuing to outpace salary growth, interest rate hikes back on the table, and younger generations entering the debt counselling system earlier than ever, the structural pressures on South African households show little sign of easing. Until income growth meaningfully catches up with the cost of living, and consumers at all levels develop greater access to financial education and early intervention tools, the cycle of over-indebtedness is likely to persist well beyond any temporary relief offered by rate cuts or retirement fund withdrawals.
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