Know Your Debt
Debt Counselling Practice Reveals Latest Stats
Well known debt counselling practice, DebtBusters are sharing insights from their recent Debt Index report.
The report shares information about consumers who are signing up for debt review with them. This is very good data as they are one of, if not the largest practices in South Africa meaning that their data is representative of what is happening across the entire industry.
What Do The Stats Say?
Though things have been looking good recently with lower petrol prices and inflation and a stronger Rand, consumers are not feeling it.
People are still struggling to make ends meet and half of all credit users are still deep in trouble.
An average family is using half their income to pay for rent and food. Most owe the banks about 71% of what they earn each month to repay their debts. In richer households that is even higher at 85% of their monthly earnings.
So, people are in trouble.
Each month they see a pretty even split between men and woman reaching out.
Over time DebtBusters are also seeing that inflation is still outstripping income increases and not in a small way. The world looks totally different to how it did 10 years ago (that’s how much data they now have) and what they are seeing is incomes up by about 2% but inflation up by about 49%.
What does that mean?
It means that if you think prices are twice as much as just a few years back, you are not wrong. Things are so much more expensive and nobody’s salaries have kept up.
What they are also seeing is that consumers who come for debt review now have around 9 credit accounts they are trying to juggle. In the past it was 6 or maybe 7 but that has just gone up and up. More and more this includes a payday loan (so short term, less than 1 month loan) taken in desperation. Around 60% of people applying have a payday loan.
But eventually consumers hit a wall and no one else wants to lend to them. Their credit limits are maxed and their credit cards and big personal loans are all due or behind.
It is not unrealistic to say, this is a very common situation and DebtBusters feel that their could easily be another 500 000 consumers right now who could immediately benefit from the protection and dignity of debt review.
They also shared amazing stats on how consumers who enter debt review commonly receive amazing consented discounts on interest rates from credit providers. The stats show that consumers who were regularly paying well over 20% for unsecured finance often see that drop to less than 3% while in debt review. Amazing.
You Need To Know Your Debt
DebtBusters are also encouraging consumers to take an active approach to their debt and stressing that consumers should know their debt.
This is part of the February National Debt Awareness Month campaign that is happening across the debt counselling industry. They say that in the future they hope to see credit providers, payment distribution agents and others also share this message and join the now regular February push to get consumers to confront their debt rather than bury their heads in the sand.
If you need a hand getting a better picture of your total debt situation and what to do about it, please head down to your local Debt Counsellor for a free, no obligation consultation.
Knowledge is Power.
