Credit for Millions, But at What Cost?

April’s Financial Literacy Month presents an important opportunity to take stock of how far South Africa has come in broadening access to financial services – and, more critically, to assess where the next phase of financial inclusion must direct its attention. Whilst expanding access to credit remains a foundational priority, the real and pressing challenge ahead lies in ensuring that credit delivers sustainable, positive outcomes for the consumers who rely on it most.

Key Takeaways

• Access alone is insufficient: South Africa has made significant progress in expanding credit access, but the real measure of financial inclusion lies in outcomes – ensuring consumers can manage credit responsibly and build long-term financial resilience, not simply enter the market.
• Financial literacy is the bridge: As credit products become more flexible, digital, and immediate, consumers need continuously evolving financial knowledge to avoid falling into debt traps. Education must be embedded throughout the credit journey, not treated as a one-off intervention.
• Inclusion requires a shared ecosystem effort: Lenders, credit bureaus, regulators, and consumers all carry a responsibility in making credit work sustainably. True success is measured not by how many people gain access to credit, but by how many are supported to remain financially healthy and progress over time.

A Decade of Progress in the Credit Market

Over the past decade, South Africa has made genuinely meaningful strides in drawing more consumers into the formal credit market. The TransUnion Industry Insights Report (IIR), which draws on data aggregated across virtually every active credit file in the country, reflects a credit ecosystem that is significantly broader and considerably more inclusive than it was even a few years ago.

This expansion is clearly visible in the sustained growth of active accounts across a range of key credit products. Credit card accounts, for instance, grew by 7.1% year-on-year in Q4 2025, accompanied by rising balances and broader participation across multiple lending categories. Taken together, these figures reflect a fundamental and historic shift: against the backdrop of greater financial inclusion, and supported by evolving lender strategies, millions more South Africans are now not only visible within the formal credit system but are actively and meaningfully participating in it.

Yet access alone is not sufficient. The next phase of financial inclusion must move decisively beyond mere market entry and shift its focus squarely onto outcomes – ensuring that consumers are properly equipped to use credit in ways that genuinely support long-term financial resilience. In other words, inclusion must evolve from access to empowerment.

From Having Credit to Mastering It

For a great many consumers, early experiences with credit remain largely transactional in nature. A store card opened to take advantage of a discount, a personal loan taken out to cover an unexpected expense, or short-term credit used to meet immediate household needs – these products serve a real purpose, but they also introduce considerable complexity, particularly within an environment where financial pressure remains persistent and widespread. Without the right tools and knowledge to manage that complexity effectively, credit can rapidly shift from being a support mechanism to becoming a source of escalating financial stress.

What the Data Reveals About Consumer Behaviour

Insights drawn from TransUnion’s Q1 2026 Consumer Pulse Study paint a revealing picture of how consumer behaviour continues to evolve under sustained financial pressure. Key findings include:

• Thirty-five per cent of South Africans plan to make use of Buy Now, Pay Later (BNPL) products within the next year, signalling an ongoing and growing reliance on short-term, point-of-sale credit arrangements.
• An equal proportion – 35% – of consumers expect to be unable to pay at least one of their bills or loans in full during the coming months, underscoring the mounting pressure on household finances.
• The role of flexible credit solutions in bridging affordability gaps is becoming increasingly pronounced, particularly among lower- and middle-income earners.

IIR data adds further depth and context to this picture. Whilst delinquency performance has improved across certain portfolios, consumer-level delinquency is becoming more widespread in specific segments – particularly those where smaller-value, higher-frequency credit is most heavily concentrated. This reinforces a critical and often overlooked truth: access without understanding the risks attached to credit can unintentionally lead to increased consumer vulnerability rather than greater resilience.

Credit as a Tool, Not a Trap

At its very best, credit is a powerful and transformative enabler. It supports geographic and social mobility, smooths the volatility that often accompanies irregular incomes, and unlocks opportunities that would otherwise remain beyond reach. However, the data increasingly suggests that many consumers are making consequential financial decisions under constrained and pressured circumstances – often relying on alternative or short-term credit solutions simply to manage day-to-day living expenses.

In this context, the line between credit as a tool and credit as a trap is not drawn by the product itself, but by how that product is used and, crucially, how well it is understood by the person using it.

The Indispensable Role of Financial Literacy

This is precisely where financial literacy becomes not merely helpful but genuinely essential – not as a once-off intervention delivered at the point of credit application, but as an embedded, ongoing capability that grows alongside the consumer’s evolving financial life. Financial Literacy Month serves as an annual reminder that education cannot be permitted to sit on the sidelines of credit ecosystems. As financial products become more flexible, more digital, and more immediately accessible, the knowledge required to use them responsibly must evolve with equal speed and purpose. Literacy, in this sense, is the bridge between access and meaningful, lasting financial outcomes.

The following habits can help any consumer become more financially literate and credit-savvy:

• Create and maintain a monthly budget that accounts for all credit repayments.
• Understand the difference between good debt (e.g., a home loan that builds equity) and bad debt (e.g., high-interest store credit used for depreciating goods).
• Learn what your credit score means and which behaviours improve or damage it.
• Seek out free financial education resources offered by registered credit bureaus and non-profit organisations.

The Role of Each Stakeholder

Advancing financial inclusion in this next phase of South Africa’s economic development cannot rest solely on the shoulders of individual consumers. It demands a coordinated and sustained effort from every participant across the entire credit ecosystem. As access continues to expand and consumer behaviours become increasingly complex, lenders must prioritise affordability, transparency, and long-term sustainability over the pursuit of short-term portfolio growth.

The responsibilities across the ecosystem can be summarised as follows:

Stakeholder	Key Responsibility
Lenders	Prioritise affordability assessments, transparency in product terms, and long-term consumer sustainability
Credit bureaus	Translate complex credit data into clear, actionable consumer insights
Regulators	Establish protective frameworks that enable responsible innovation
Employers and civil society	Embed financial education in workplaces and communities
Consumers	Engage actively with their credit profiles and seek to understand their obligations

Credit providers and bureaus, in turn, carry a responsibility to translate complex credit data into clear, actionable insights – helping consumers understand not only whether they qualify for credit, but how to manage that credit responsibly over time. This must be supported by a regulatory environment that is robust enough to protect consumers whilst still enabling the kind of responsible innovation that can expand access further. Crucially, financial education must be embedded throughout the entire credit journey and integrated meaningfully into key decision-making moments, rather than being treated as a standalone or peripheral initiative.

Using Data Proactively

There is now a clear and compelling opportunity to use data more proactively across the credit ecosystem:

• Identifying early warning signs of financial distress before they escalate into default
• Enabling timely and targeted interventions that support consumers at critical junctures
• Creating clearer, better-defined pathways that help consumers graduate to a broader and more appropriate set of financial products as their credit profiles improve and strengthen

In this context, the concept of quality credit becomes the truest measure of success in financial inclusion – defined not merely by how many consumers enter the credit system, but by how many of those consumers are actively supported to remain financially healthy and to progress meaningfully over time.

Why This Matters Now

South Africa’s credit market is entering a more mature and stabilised phase of its development. According to the TransUnion IIR, the market has transitioned from the turbulence of post-pandemic recovery to a period of broader stabilisation, supported by steadier inflation, more favourable interest rate conditions, and improving repayment behaviour in key lending segments.

However, this stability is by no means uniform across the market. Growth in credit access is increasingly being matched by more cautious and deliberate lending strategies and by notably shifting consumer behaviour – reinforcing the ongoing need to balance market expansion with long-term sustainability, both at the portfolio level and for individual consumers.

The Future of Financial Inclusion

Ultimately, the future of financial inclusion in South Africa must be measured not by inputs – how many accounts have been opened, how many loans have been disbursed – but by outcomes. The defining question must become whether every consumer who enters the credit market is genuinely equipped to navigate it confidently, responsibly, and sustainably over the long term.

As the national conversation continues to evolve, the central question is no longer simply whether consumers can access credit. The more important and more demanding question is whether credit is actively helping them to build a better and more secure financial future. Financial inclusion can only be deemed truly successful when it results in financially healthy, economically resilient consumers who are empowered to participate fully and sustainably in the broader South African economy – not just for a season, but for a lifetime.

Whether you are new to credit or a seasoned borrower, the following steps can help ensure that credit remains a tool for progress rather than a source of stress:

• Borrow only what you can comfortably afford to repay within the agreed term.
• Understand all fees, interest rates, and penalty clauses before signing any credit agreement.
• Make minimum payments on time, every time – even a single missed payment can affect your credit score for up to two years.
• If your financial circumstances change, contact your credit provider proactively. Many lenders offer formal hardship or payment deferral arrangements.
• Review your credit report annually and dispute any inaccurate information with the relevant bureau.

Conclusion

South Africa’s credit market stands at a pivotal crossroads – one where the hard-won gains of financial inclusion must now be deepened rather than simply broadened. Expanding the number of consumers who hold credit accounts is no longer sufficient as a standalone goal; what matters now is whether those consumers are equipped, supported, and empowered to use credit as a genuine instrument of financial progress. This requires a collective and sustained commitment from every player in the ecosystem – lenders who lend responsibly, bureaus that communicate clearly, regulators who protect without stifling innovation, and consumers who engage actively with their own financial health. Financial Literacy Month is a timely reminder that knowledge is not a luxury in this equation – it is the foundation upon which every other effort rests. When credit is understood, managed well, and designed with the consumer’s long-term wellbeing in mind, it ceases to be a risk and becomes one of the most powerful tools available for building a more equitable and financially resilient South Africa.