Debt pressure has become severe among the country’s high earners as consumers turn to unsecured credit to manage the increasing cost of living in South Africa.
The DebtBusters Q2 2026 Index has revealed that those earning R50 000 or above a month needed 103% of their take-home pay to service debt, meaning that their debt commitments exceed their monthly income before other living expenses were even considered.
The total debt-to-annual-net-income ratio has also reached 307%, which is the highest of all groups.
Higher lending to higher earners
Benay Sager, DebtBusters executive head, said this was mainly due to higher lending to higher earners, as they are believed to be more stable in their jobs and may be considered to be better able to pay back the money.
“While lending activity to lower-income groups has slowed down significantly since this period, higher earners are needing to borrow because they’ve also been supporting a wider number of family members and businesses, and so on. Again, this has particularly been the case since the pandemic,” said Sager.
The report has shown an increasing gap between income and the cost of essential goods and services. Since 2021, average consumer price inflation has increased about 29%, while average income growth has been around 23%.
Sager said some household expenses have risen much faster, including petrol prices that have increased by 52% since 2021, while electricity tariffs have more than doubled, rising by 101%.
“The costs of many administered items have increased, such as electricity, petrol, and municipal rates – and so have the costs of medical aids and private schooling, among others.
Debt-to-income ratio worse for higher earners
“These are generally the primary reasons why higher earners, in the absence of increasing salaries, have needed to borrow more money. All these factors have come together to result in what appears to be a ratio of debt-to-income that is disproportionately worse for higher earners than for lower earners,” said Sager.
As consumers struggle to absorb these increases, more are turning to unsecured borrowing. About 96% of new debt counselling applicants had a personal loan when they applied, while 63% had a one-month or payday loan – the highest level recorded.
The average number of credit agreements per new applicant has also increased to 8.7, its highest level since 2016. DebtBusters said this points to a renewed increase in borrowing from multiple lenders.
Unsecured debt is now 27% higher on average than it was in 2021. The increase is much greater among higher-income consumers, with those earning between R35 000 and R50 000 carrying 55% more unsecured debt and those earning more than R50 000 carrying 84% more.
For top earners, this increase is significantly above the 29% rise in inflation and the 7% growth in salaries over the same period.
Total debt, including secured and unsecured borrowing, is 24% higher on average than in 2021. The average interest rate on unsecured debt stands at 19.6% a year, while vehicle finance averages 14% and home loans 10.4%. However, consumers in the R10 000 to R20 000 income bracket remain under severe pressure.
- High earners in South Africa earning R50,000 or more a month require 103% of their take-home pay to service debt, exceeding their monthly income.
- The debt-to-annual-net-income ratio for high earners has reached 307%, the highest among all income groups.
- Since 2021, average consumer price inflation increased by 29%, while average income growth was around 23%, with petrol prices up 52% and electricity tariffs doubling by 101%.
- About 96% of new debt counselling applicants had a personal loan, and 63% had a payday loan, with the average number of credit agreements per applicant rising to 8.7.
- Unsecured debt among those earning more than R50,000 is 84% higher than in 2021, significantly outpacing inflation and salary growth.
