South Africa's Household Debt Trap: Call for Earlier Intervention

Prof Conrad Beyers, Head of the Department of Actuarial Science at the University of Pretoria, has warned that South Africa is sliding into a household debt crisis in which growing numbers of working people are borrowing simply to survive.

## Debt Funding Essentials, Not Growth

Credit is increasingly being used not to buy homes or build businesses, but to pay for food, electricity and existing debt. The individual borrows again to service earlier debt, and interest and penalties leave them even more dependent on credit. The Old Mutual Savings and Investment Monitor 2026 found that 40% of respondents experience considerable financial stress, rising to 47% among those earning below R30,000 per month. Half of respondents frequently worry about debt, compared with 43% in 2024.

The true position may be considerably worse — debt owed to family, stokvels, and unregistered lenders remains invisible to credit bureaux. Some households remain technically up to date only by taking new credit or postponing other payments.

## Banks Must Act Now

Prof Beyers argues that banks should use the information they already hold to identify distress before customers default. A viable household beginning to fall behind should be offered early restructuring, fair consolidation and lower-cost refinancing, rather than another expensive loan.

Banks should stop marketing new credit to customers who are already using debt to repay debt. They should compete more aggressively on bank charges and the cost of consumer credit. Saving and reducing debt should be made at least as easy as increasing a credit limit.

## Productive Finance Over Short-Term Lending

A larger share of finance should be directed towards viable small businesses, equipment, housing, infrastructure and other activities that generate income and employment. Banks should also change how they measure success — the relevant question is not only how many products were sold, but whether customers are financially stronger three or five years later.

Prof Beyers notes that possible intervention by the South African Reserve Bank and the National Credit Regulator may be needed if banks do not act proactively. Voluntary industry agreements should be considered with firm commitments, timelines and public measures for reducing destructive household debt.

If you are struggling with debt, consider speaking to a registered debt counsellor about the debt review process or check your credit score to understand your current financial standing.

---

**Source:** University of Pretoria

---

**Related:** - Understanding the debt review process - Find a registered debt counsellor - Check your credit score