Although some positive developments have boosted consumers’ financial confidence going into 2026, over the past decade, increasing expenses have significantly outpaced income growth, and record numbers of consumers now rely on high-interest personal loans to make ends meet.
These were some of the findings from DebtBusters’ 2025 Q4 Debt Index, which marks its tenth anniversary this year.
Factors that helped improve confidence included multiple interest rate reductions in 2025. Combined, these cuts resulted in rates that were 150 basis points lower than in late 2024, easing pressure on consumers with financed assets.
Access to the two-pot retirement system provided cashflow relief to consumers who chose to withdraw a portion of their savings.
Compared to previous years, inflation tapered, resulting in one of the lowest annual inflation figures of the past few decades.
Benay Sager, executive head of DebtBusters, says despite this, during the past decade, electricity tariffs have increased by 165%, petrol by 74%, and the compound effect of inflation is 49%. By contrast, income growth has lagged considerably.
“The result is that consumers who applied for debt counselling in Q4 2025 needed 71% of their take-home pay to service their debt – the highest level we’ve seen since 2017.”
A record 96% of these consumers had a personal loan, and 59% a one-month payday loan – another record.
Compared to the same period in 2016, consumers who applied for debt counselling in Q4 2025 had:
- 47% less purchasing power. Although nominal net income grew by ~2%, the compound increase in consumer-price inflation was 49% over the decade. Consequently, in real terms, consumers are taking home 47% less than in 2016.
- A high debt-service burden. Consumers are spending 71% of their take-home pay to service debt before entering debt counselling. This is the highest figure since 2017. Those taking home more than R35,000 a month use 85% of their income to repay debt, and have a record debt-to-income ratio of 210%.
- Increased financial stress, with age. The average age of new debt-counselling applicants has increased to 40 during the past few years. The proportion of applicants who are 45 or older has increased from 20% in 2016 to 31% in 2025.
- Unsustainably high levels of unsecured debt, especially amongst top earners. Unsecured debt for those earning more than R35,000 a month is 75% higher than in 2016, vastly outpacing inflation and net-income growth.
Sager says that although the successive interest rate reductions have provided relief, vehicle and unsecured debt continue to exert significant pressure on finances.
“Although the average interest rate for unsecured debt is somewhat lower, at 21.9%, it remains stubbornly high. Debt counselling is the best way to restructure this debt, reducing unsecured rates to ~2.6% per annum and negotiating vehicle debt to more manageable levels.
“The benefits are considerable, not just for the people who completed debt counselling – a cohort that’s almost 12 times larger than in 2016. In 2025, our clients repaid R5.3 billion to creditors, allowing this money to flow back into the economy.”
The release of the Q4 2025 Debt Index coincides with National Debt Awareness Month 2026. This year’s theme, ‘Know your debt’, focuses on empowering South Africans to take control of their financial health by understanding their debt and credit standing.
Many consumers are taking the initiative, with subscriptions for online debt management tools up 41% compared to Q4 2024, and a high level of interest in MyMoney Saver, which enables consumers to stretch their budgets with savings on essentials, entertainment, and dining out. DebtBusters expects the uptake to grow as regulatory price increases, such as electricity and municipal rates, take effect.
