South African consumers struggle with debt despite interest rate cuts

Debt experts believe that despite interest rates being cut by 100 basis points by the South African Reserve Bank from 2024 until July 2025, consumers are still struggling to get a handle on debt.

Benay Sager, the Executive Head of DebtBusters, said that South Africa has had 100 basis points of cuts, which is pretty significant. “Because it was done over a period of time, we haven’t seen the full impact of it yet – but it does come as a relief to consumers, particularly those who have bonds or are paying for vehicles and so on. It’s also an indication that inflation is more under control."

Sager added that DebtBusters had recently completed the 2025 Money Stress Tracker, which indicated that debt levels are still elevated. "I think anecdotal evidence would support that as well as the hard data. The reality is that we borrow to make ends meet, and incomes haven’t really kept up with inflation for the last 10 years or so, so there’s still some borrowing to work through the system."

Sager said that DebtBusters are particularly seeing elevated debt levels among higher-income earners, as they seem to be the ones that are more likely to get loans; while at the lower end, we’re seeing that lending has been very muted in any case. "So I think it’s a bit of a mixed bag, but overall, our outstanding debt is more than what it was before, and consumers are definitely feeling it."

Sager added that if consumers have extra money, this would be the right time to put it into your bond if you have one, or to pay extra for your vehicle, as most vehicles will come with a balloon payment. "As consumers, we always tend to adjust our spending habits based on what’s happening around us, and habits take a while to form – so if you do have extra money, use it to pay down your debt. Now is a good time to take advantage of the interest rate cuts and lower inflation. We don’t really know what interest rates and inflation will be like in the next several months, so we do feel it’s the right time to make some choices and behavioural changes."

CEO of Debt Rescue Neil Roets said that despite five interest rate cuts since 2024, the debt situation for South African consumers remains dire. "At Debt Rescue, we are still seeing thousands of people approaching us every month, overwhelmed by the burden of debt. The reality is that any savings from these rate cuts have been swallowed up by the relentless rise in the cost of living."

Roets added that food and non-alcoholic beverages remain one of the biggest drivers of consumer inflation, which contributed 0.9 of a percentage point to the overall CPI of 3% for June 2025.  “Households are feeling this every time they go shopping. "Even with lower interest rates, people are not experiencing any real relief—because their money simply doesn’t go as far as it used to. Consumers are still living on the edge, struggling to keep up with basic expenses while servicing multiple debts. Many are being forced to make impossible choices just to get through the month."

Roets said that this isn’t just about numbers on paper; it’s a human crisis we’re seeing play out daily. "Many consumers are in a debt spiral just trying to put food on the table, often on credit."

"We at Debt Rescue have been part of this industry since its inception, and in all that time, the pressure on consumers has rarely been as unrelenting and widespread as it is right now."

Roets said with the official unemployment rate sitting at 32.9%, and many more experiencing income instability, South Africans are exhausted, both financially and emotionally. "For many, debt has become a way to survive, not a tool to get ahead. Adding to this is the growing uncertainty around the potential impact of the US tariff hikes, which could further strain key industries and have a ripple effect on jobs, prices, and household stability in the months to come."

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