Student Village & Unisa Report Show more students have Credit than before
43% of Students reported having a Credit Card
In their recent youth spending report, Student Village and Unisa report that South African students are taking on more debt than ever. Thi s matches the general trend in SA over the last few years as more and more unsecured lending has been taking place.
The report shows that Student debt has, in fact, more than doubled in the past three years. The report which in 2010 showed less than 10% of students having access to credit cards now shows that 43% now have access to this form of credit.
The survey was of over 1200 students from the major metropolitan universities including the University of Cape Town, Stellenbosch, the University of Johannesburg and the University of the Witwatersrand.
How can students get a Credit Card?
If a student can show that they receive a steady income (in some cases as little as only R200 a month) from their guardian or parent then the big banks such as ABSA and Standard Bank are happy to give them a small credit limit on a credit card. The banks feel that setting a small credit limit will help teach these future earners the value of access to credit and responsible credit use.
The need for new credit users
In the past few months the major banks have been predicting a drop in their unsecured loaning practice. This is due to many factors including having to hold back from extending more credit to consumers who actually will not be able to afford it. To do so would be something the National Credit Act calls “Reckless Credit”. If a creditor grants reckless credit they risk losing the right to collect the funds as a court may set the debt aside.
The National Credit Regulator reports that of the nearly 20 million credit-active consumers in SA, almost half are not paying their debts back responsibly and thus have impaired records. This is putting added pressure on the banks to find a new source of income and it seems that South Africa’s student youth might be one such market.