The size of a person’s pay cheque does not shield them from falling into debt, a newly released report has shown. In fact, the opposite tends to be true: the more money an individual brings home each month, the more credit they are typically offered by lenders and retailers.
Key Takeaways
- Income offers no shield against debt: Credit providers lend based on what a person earns, so higher salaries simply unlock access to more credit rather than providing financial protection.
- Personal loans drive the most financial strain: Among all forms of unsecured debt tracked, personal loans, often taken out to cover other existing debts, contribute the most to household financial breakdown, more so than store or cellphone accounts.
- Most applicants are repeat debt review cases: The majority of people seeking help from a debt counsellor are already under an active debt review arrangement, and repeat applicant trends cannot yet be measured due to limited historical data.
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The Higher the Income, the More Credit Tends to Be Extended
The first ever South African Financial Pressure Index (SAFPI) has drawn attention to the fact that earning a healthy salary will not necessarily keep a great number of people out of financial trouble, since the more a person earns, the more credit they are likely to be offered by banks, retailers and lenders.
SAFPI is a monthly research initiative based on anonymised data collected from debt review applications, compiled by a specialist debt counselling provider.
The inaugural edition, published in early August, revealed that the majority of individuals applying for debt review are channelling more than half of their monthly income towards repaying unsecured debt, a category that includes personal loans, credit cards, and retail store accounts.
Discipline Is Still Required, Even With a Good Salary
According to Rowan Breeds, the organisation’s lead debt counsellor, the typical or median applicant earns less than R10 000 per month, yet carries R13 439 in unsecured debt, while paying out R4 392 every month simply to service that debt.
Breeds explained that debt tends to increase in line with income, and this is precisely the reason why a comfortable salary offers no real safeguard against financial strain. He pointed out that credit providers base their lending decisions on what a person earns, meaning that a higher income essentially translates into qualifying for a larger amount of credit rather than greater financial security.
Financial experts often recommend keeping total debt repayments below roughly 30% of take-home pay, a guideline sometimes referred to as the “debt to income ratio”, to leave enough room for savings, emergencies and everyday living costs.
The index further revealed that personal loans make up the largest share of money owed by applicants, followed by several other categories of credit.
Types of Unsecured Debt Ranked by Applicants (Highest to Lowest)
| Rank | Type of Unsecured Debt |
|---|---|
| 1 | Personal loans |
| 2 | Credit cards |
| 3 | Store cards |
| 4 | Other credit |
| 5 | Cellphone contracts |
| 6 | Furniture accounts |
| 7 | Clothing accounts |
| 8 | Student loans |
Breeds noted that this concentration around personal loans matches what debt counsellors regularly encounter during consultations. He remarked that it is seldom a store account or a cellphone contract that pushes a household budget over the edge, and that it is far more commonly a personal loan, particularly one that was taken out specifically to cover other existing debts, that ultimately causes the real damage.
Using a new loan to pay off older debts, sometimes called “debt consolidation” or “debt stacking” when done informally, can offer short-term relief but often increases the total interest paid over time if it simply shifts the debt around rather than reducing it.
Most People Seeking Help Are Already Under Debt Review
Breeds also revealed that the majority of individuals who approach a debt counsellor for assistance are, in fact, already under a debt review arrangement registered in their name at the time they come forward.
Under South African regulations, an individual may only be placed under debt review with a single debt counsellor at any given time. Should a person already be listed under debt review, they generally have a few routes available to them:
- Transferring their case to a new, different debt counsellor
- Obtaining a clearance certificate once all of their restructured debts have been fully settled
- Applying directly to the court if their personal or financial circumstances have since changed
Debt review, also known as “debt counselling”, was introduced in South Africa under the National Credit Act of 2005 as a formal, legally recognised process designed to help over-indebted consumers restructure their repayments rather than face repossession or legal action from creditors.
Repeat Applicants Cannot Yet Be Measured
Breeds added that the organisation’s data is not yet able to include repeat applicants, referring to individuals who return for further assistance after a period of 90 days or more has passed.
He explained that because the data set only begins in December 2025, there simply is not enough historical information available for this particular measure to carry any real meaning at this stage. Breeds said that reporting on repeat applicants now would risk creating the impression that almost nobody returns for further help, when in truth, the organisation simply cannot see far enough back in time to know whether that is accurate. As a result, this particular measure will be held back until roughly twelve months of data have been collected.
Conclusion
The South African Financial Pressure Index makes clear that a higher salary is no guarantee of financial stability, since credit is extended in proportion to income rather than to a person’s actual ability to manage repayments responsibly. With personal loans emerging as the single biggest contributor to household financial strain, and with most people seeking debt counselling already found to be under an existing debt review, the findings point to a cycle where access to credit consistently outpaces genuine financial resilience. As the index continues to gather data over the coming months, particularly around repeat applicants, it is expected to offer an increasingly clear picture of how deeply unsecured debt is embedded in the financial lives of everyday South Africans, regardless of what they earn.
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