South Africans Turning to Overdrafts as Financial Pressures Deepen

South Africans are increasingly relying on overdraft facilities and various short-term lending options as high interest rates, persistent inflation and sluggish economic growth steadily erode disposable incomes. The ongoing combination of these pressures is placing a growing burden on households across the country at a time when many families are trying to stretch every rand as far as possible. A stock photograph accompanying the report captures the intensifying concern around rising living costs.

Key Takeaways

• Household debt pressures are escalating: South Africans across all income levels are increasingly relying on overdrafts, personal loans and payday loans as rising living costs outpace stagnant income growth, leaving many with dangerously high debt-service ratios.
• Vulnerable and middle-income earners are hit hardest: Low-income consumers use nearly all their monthly earnings to service debt, while even those earning around R35,000 a month allocate more than three-quarters of their income to repayments, reflecting widespread financial strain.
• Debt counselling is growing and proving effective: Demand for online debt management is surging, and the number of consumers successfully completing debt counselling has risen sharply, with more than R540 million repaid in Q3 2025 alone, highlighting its role as a vital recovery tool.

Quarterly Debt Review Shows Continued Financial Distress

The most recent quarterly assessment of debt counselling trends suggests that South Africans remain in a prolonged period of financial distress. This evaluation, compiled as part of DebtBusters’ Q3 2025 debt index report, highlights an ongoing rise in the number of individuals seeking structured help to manage their debt obligations. Released on Tuesday, the report provides a broader, data-driven view of how consumers are coping with deepening financial commitments in an uncertain economic climate.

DebtBusters’ analysis indicates that recent reductions in interest rates and petrol prices have offered consumers some small measure of relief, slightly easing the pressure of monthly repayments. Despite this, most households continue to battle ongoing financial challenges, with any reductions proving insufficient to offset years of rising costs. Many consumers are still far from achieving financial stability, and for some, the small gains made from relief measures are quickly swallowed by other increases in living expenses. Analysts often say that small rate cuts can take months to translate into real household improvements, which is why many people feel little immediate change.

Short-Term Loans Filling the Gap Left by Stagnant Income Growth

DebtBusters reports that stagnant wage growth over the last nine years has collided with rising living expenses, creating a widening financial gap for millions of South Africans. As incomes fail to keep pace with rapidly growing costs, increasing numbers of individuals are turning to unsecured credit, personal loans and short-term borrowing to survive the month. Many rely on these loans to cover basic needs such as groceries, utilities and essential transport.

Long-Term Decline in Purchasing Power

Other figures in the Q3 2025 report show that the cost of essential goods and services has risen dramatically over the past nine years. Compared to 2016, South Africans now have almost half the purchasing power they once had. Electricity costs have surged by more than one and a half times, while fuel prices remain significantly higher, both contributing to cumulative inflation exceeding fifty percent. In stark contrast, nominal net incomes have barely grown over the same period.

Rising Debt-Service Ratios Across Income Groups

The report reveals that consumers entering debt counselling are often already dedicating a substantial portion of their net income to repayments. Before seeking help, the average person spent around seventy percent of their take-home pay servicing debt, marking the highest burden recorded since 2017. Those earning around R35,000 per month are under even greater pressure, with more than three-quarters of their income directed toward debts and total obligations reaching nearly twice their net monthly earnings. South Africa’s household debt-to-income ratio is one of the highest among emerging markets, frequently cited as a key risk to long-term economic stability.

High-Income Consumers Also Carrying Heavy Unsecured Debt

The report emphasises that elevated debt levels affect all income groups, not only lower earners. High-income South Africans are also carrying substantial unsecured debt. Overall unsecured debt has grown by nearly a third compared to nine years ago, and although it has dipped slightly since last year, it remains above inflation-adjusted levels. For those earning R35,000 or more per month, unsecured debt has climbed significantly since 2016. With salaries lagging behind rising costs, many higher-earning consumers have been supplementing their income with unsecured credit to maintain household expenses.

Conclusion

The latest debt findings paint a picture of a nation grappling with deepening financial pressure, where rising living costs, sluggish income growth and heavy reliance on unsecured credit continue to squeeze households at every income level. While small improvements such as lower interest rates have offered limited relief, the growing dependence on overdrafts and short-term loans shows that many South Africans are still struggling to bridge widening financial gaps. Even so, the strong rise in successful debt counselling completions demonstrates that structured financial support remains a powerful tool for helping consumers regain stability, rebuild their financial health and gradually break free from unsustainable debt cycles.