Q1 2026 Debt Index

Two-pot system and rate cuts give consumers some relief

• But top earners under acute financial stress
• Global pressures driving inflation and possible rate increases

Download the full Q1 2026 Debt Index here.

South Africans’ finances benefited from the two-pot retirement system and successive interest rate cuts in the first quarter of 2026; however, global events are now driving core inflation and possible rate increases.

On this, the 10th anniversary of the Debt Index, Benay Sager, executive head of DebtBusters, says that while interest in debt counselling was slightly muted during the quarter, a 23% increase in online debt management tool subscriptions indicates that consumers are still experiencing underlying financial stress.

“What remains consistent is that debt burdens are elevated, and income growth is not keeping pace with rising costs,” Sager notes.

Consumers who applied for debt counselling during the quarter needed 64% of their take-home pay to service debt. While this is an improvement from the peak of 73% in Q1 2021, and is trending downwards, it is still high.

For top earners[1]; that is, those who take home over R50,000 a month, the figure is 101%, and their debt-to-income ratio is 303%, the highest of all the income bands.

Since 2021, income has broadly kept pace with the average CPI growth of 27%, but Sager says this headline figure masks a deeply uneven picture. Income gains have been concentrated in the higher income bands, while lower earners have seen little or no real improvement since 2016.

Consumers have increasingly turned to unsecured credit to bridge the gap. During the quarter, 96% of debt counselling applicants had a personal loan, and 61% had a one-month or payday loan; both record numbers. The average number of credit agreements per applicant reached 8.5, the highest level since 2017, highlighting the growing role multi-lender relationships are playing in consumer finances.

Average unsecured debt levels are 23% higher than in 2021. For those taking home R50,000 or more, the figure is 99% higher, double the 2021 levels. This far outpaces both inflation at 27% and salary growth of 6% for this income band, indicating that top earners are under acute financial stress.

While the top earners’ debt has grown by 42% since 2021, exceeding inflation, lower-income earners have seen total debt decline by up to 25%. The reduction, however, is due to less access to credit rather than improved financial health.

“Unsecured loans are being granted to a smaller group of consumers, highlighting that risk is being concentrated in an even smaller group,” says Sager.

Interest rates on credit agreements have continued to ease, in line with the Reserve Bank’s rate reductions. The average unsecured credit rate is now 17.9% per annum, but the median is 20.3%, indicating the range of interest rates consumers are charged on unsecured debt.

The average interest rate for vehicle finance is 13.6% per annum. For home loans, it is 10.2%. The share of home loan debt has fallen from 30% in Q2 2023 to 20% in Q1 2026, reflecting the impact of the interest rate cuts that took place from Q3 2024 to Q4 2025.

“Higher-income earners have a larger proportion of secured debt, but middle-income earners feel the pressure of vehicle loans the most,” says Sager.

The latter group, the backbone of South Africa’s working population, earns between R10,000 and R20,000 a month and spends almost a third of their disposable income on food. This leaves almost nothing for insurance, savings, or emergencies. 

“Interestingly, almost all consumers spend roughly 10% of disposable income on transport, about 9% on utilities, and about 4% on cell phone charges.”

Sager says people born after 2000 comprise 9% of new debt counselling applicants. This signals that financial stress is beginning to affect a new generation earlier in their adult lives.

“The good news is that the number of consumers who complete debt counselling is 14 times what it was a decade ago, with these consumers paying more than R560 million back to creditors during their debt counselling programme.

“Another positive development is that interest in online debt management tools, particularly among younger people, remains strong. Subscriptions have grown by 23% in the past year,” Sager notes.