SA's consumers battling to pay debts

Consumers are tearing their hair out when it comes to paying debts. Image: Innovated captures Fotolia

This comes just a day after Reserve Bank figures showed debt levels remained high in the third quarter‚ and interest remained at their lower level in 40 years. Consumers are battling to cope with electricity price increases and lower wage increases compared with previous years.

Petrol prices rose 17c/l this month‚ while Gauteng consumers will have to pay tolls for using highways in the province.

The number of consumers with impaired records - accounts that have not been paid for three months or more - increased by 71‚000 in the third quarter from 9,69m to 9.76m according to the NCR's report.

The government has proposed a credit amnesty for millions of consumers with bad credit records. The amnesty is expected to come into effect next year and will probably be applied to loans of R10,000 or less.

NCR 'getting worried'

Credit providers are applying stricter rules when asked for credit. Image: Forestpath Fotolia

NCR's chief executive Nomsa Motshegare said the regulator was getting worried about the rising number of South Africans with impaired credit records. The latest figures were an indication that both consumers and credit providers needed to exercise caution.

"With regard to consumers‚ it is important they make sure that they borrow responsibly‚" Motshegare said. "Credit providers also need to lend money responsibly‚" she added.

Motshegare said there are now instances where consumers who are unable to access credit from registered financial institutions are now resorting to using unregistered ones.

Debt Counsellors Association of SA's president Paul Slot expected credit use to continue this festive season. "We can expect consumers to spend out existing credit agreements or apply for new debt‚" he said.

He said that the lending criteria of many major credit providers were now "stricter" and many applications would probably be declined. The number of consumers classified as being in good standing rose by 9‚000 to 10.

The NCR encouraged those struggling to meet their debt repayments to approach credit providers to renegotiate repayment terms.