SA consumers face credit crunch as inflation looms, debt experts warn

Despite temporary relief from VAT stability and subdued inflation, South African households remain shackled to credit as rising costs and stagnant wage growth erode purchasing power.

The South African Reserve Bank, projection of inflation climbing to 3.6% in 2025—and 4.5% by 2026—coupled with global economic turbulence, has dashed hopes of imminent interest rate cuts, according to National Debt Counsellors’ Association (NDCA) chairman Benay Sager.

With electricity tariffs, tax bracket creep, and municipal service fees compounding financial strain, Sager warns that credit reliance will persist, urging consumers to scrutinise interest rates on loans and credit cards against National Credit Act limits.

Recent regulatory shifts since 2015 have capped interest rates, but fluctuating repo rates—from COVID-era cuts to post-2022 hikes—mean borrowers face volatile repayment terms.

A typical R30,000 personal loan at 28.5% over one year incurs R8,550 in interest, while average credit card balances of R24,000 monthly could drain R5,160 annually.

Sager emphasises that many consumers accept unfavorable terms without shopping for better deals, a risky approach given escalating costs.

The NDCA advises struggling borrowers to consult accredited debt counselors, who can slash unsecured debt interest to near-zero under debt review programs and renegotiate vehicle loan terms.

“Renegotiation is transformative—it turns unsustainable debt into manageable repayments,” Sager explains, directing the public to www.ndca.org.za/ for accredited assistance.

As economic headwinds intensify, proactive debt management may prove the lifeline South Africans need to weather the storm.