South Africans are scared of debt – just not credit cards

 ·30 Nov 2023

South African consumers have a strong aversion to debt, with many being forced to use credit cards to pay what they owe.

According to Nedbank’s analysis of the broad money supply, annual growth in credit extension to households eased to 5.2% – the lowest level since July 2021.

This was due to higher interest rates, weaker household finances and fragile consumer confidence.

Consumers are becoming increasingly concerned about acquiring more credit, whilst banks are also cautious about extending loans, given the rising default rates.

For instance, Investec noted that its expected credit loss (ECL) impairment charges rose from £29.4 million (R665 million) in 1H23 to £46.3 million (R1.05 billion) in 1H24.

Although Standard Bank said that its credit impairment charges have slowed this year, they still remain elevated in part due to the strain on consumers amid rapid interest rate increases.

Growth also slowed in all sub-components, but credit card usage remained relatively robust at 9% y/y, highlighting distressed borrowing.

Home loans eased to 4.7% y/y – the lowest level since March 2021.


Nedbank said that it expects credit growth to remain modest in the last month of 2023 and early 2024, with downward pressure coming from both household and corporate demand.

“On the household side, the cumulative impact of the interest rate hikes will continue to filter through the economy, keeping debt service costs high and compelling households to be cautious of spending and taking on additional debt,” Nedbank said.

“At the same time, banks will be cautious of extending loans given the rising payment defaults. Corporate demand will continue to be supported by renewable energy projects.

“However, the upside will be contained by fading profits and high operational costs, which will likely convince many companies to trim large capital expenditure plans. We forecast credit growth to pick up gradually during the second half of next year as the interest rates ease and the economy improves slightly.”

Read: Bad news for take-home pay in South Africa

Show comments
Subscribe to our daily newsletter