It gets worse for South Africans who earn R20,000 per month or more

Despite some green shoots, South Africans who earn R20,000 or more are under sustained financial pressure, with debt-to-income ratios trending upwards.
According to DebtBusters’ Q4 2024 Debt Index, the demand for online debt management increased by 9%, and debt counselling enquiries rose by 8% compared to the previous year.
This growing interest reflects consumers’ proactive approach to managing debt before it spirals out of control.
Benay Sager, executive head of DebtBusters, said that while the economic environment improved in some respects, the underlying financial strain on households persists.
One of the most concerning trends is the rising debt-to-annual-income ratio, which climbed for the second consecutive quarter in Q4 2024, now standing at 113%.
This figure highlights the lingering effects of interest rate hikes that began in November 2021, which, despite some moderation, remain elevated.
Sager points out that 82% of individuals seeking debt counselling had personal loans, and 52% relied on short-term, one-month loans, indicating that many South Africans are supplementing their income with unsecured credit.
The financial strain is particularly severe among middle to high-income earners.
Consumers earning R20,000 per month face a debt-to-income ratio of 137%, while those taking home R35,000 or more grapple with a staggering 187% ratio—the highest levels ever recorded.
On average, these consumers allocate 68% of their take-home pay to service debt, with the figure rising to 74% for those in the higher income bracket.
This situation underscores the unsustainable nature of current debt levels, exacerbated by stagnant salary growth.
Compared to 2016, South Africans have seen a dramatic 42% reduction in purchasing power. While nominal incomes are 2% higher than eight years ago, cumulative inflation of 44% has eroded real earnings.
Even for those earning R35,000 or more per month, where nominal incomes have grown by 10%, the gains are negligible when adjusted for inflation.


This decline in real income has driven many to rely heavily on unsecured debt, which is now 29% higher than in 2016, and a staggering 60% higher for top earners.
Debt counselling has proven to be an effective tool in managing these financial challenges.
Under debt counselling, interest rates on unsecured debt can be reduced significantly, from an average of 24.6% to around 2.5%, enabling quicker repayment of high-interest obligations.
Additionally, vehicle debt and balloon payments, which typically carry interest rates of 15.4%, can be renegotiated to more manageable terms.
The South African Reserve Bank’s (SARB) Quarterly Bulletin for Q3 2024 corroborates these findings, noting a slight increase in household debt as a percentage of nominal disposable income, from 62.1% in Q2 to 62.2% in Q3.
While the cost of servicing debt relative to disposable income remained steady at 9.1%, the overall debt burden continues to weigh heavily on consumers.
Spending patterns further reflect these economic pressures. While expenditures on essentials like food, beverages, and medical products have moderated, households continue to struggle with the cumulative impact of rising living costs and stagnant income growth.
Since 2016, electricity tariffs have surged by 135%, petrol prices by 72%, and inflation has compounded to 44%.
Despite some signs of economic recovery, the persistent gap between income growth and living expenses means that financial sustainability remains a distant goal for many South African households.