South African households in serious trouble 

South African households are under increasing pressure from a rising debt burden, driven largely by credit card debt. 

Consumers have turned to credit to maintain their lifestyles amid elevated financial pressure from high interest rates. This is despite a decline in inflation to the lower end of the Reserve Bank’s 3% to 6% target range. 

Some South Africans have even begun looking beyond additional credit and loans to cover everyday expenses, with many tapping their retirement savings under the new two-pot system. 

Stanlib chief economist Kevin Lings revealed that household credit card debt has grown very strongly in the past two years, with an annual growth rate hovering around 10%. 

Additional credit has been in high demand over the past two years as South Africans search for ways to supplement their monthly income. 

In many cases, this is from South Africans looking to maintain their lifestyle amid rising prices, but in some cases, it is also to make everyday purchases. 

Standard Bank recorded a 43% year-on-year increase in new credit card uptake over the past year, driven by both bank-led growth initiatives and rising consumer demand.

This surge has been accompanied by notable shifts in how consumers use credit cards in South Africa. They are rapidly becoming the preferred payment method for many, particularly for everyday essentials like groceries. 

The top five spending categories among credit card users were groceries, restaurants, fuel, department stores, and clothing retailers.

This is also partly due to consumers using credit cards as their primary transactional account due to the improved rewards offered by banks for using them. 

Tumelo Ramugondo, Head of Credit Card at Standard Bank, pointed out that although new credit card take-ups have increased, the average card limit has remained stable. 

This indicates that customers are still conservative when it comes to using credit over debit cards. Despite this, credit card debt has soared in South Africa over the past two years, growing at an annual rate of over 8%. 

This can be seen in the graph below, courtesy of Lings and Stanlib, which shows South Africa’s rate of growth in household credit card debt. 

Consumers coming under pressure

South African consumers continue to face financial pressure despite a sharp decline in inflation and some cuts to interest rates. 

Data analysed by Discovery Bank and Visa showed that consumer spending declined year-on-year in real terms in 2024. 

Discovery Bank uses the data it collects from its client base alongside Visa’s data to compile the SpendTrend report. It also surveys 1,000 South Africans across different banks and income segments.

The report is the most comprehensive analysis of spending in South Africa, drawing on data from over one million South Africans and over 2.6 billion transactions. 

One of the key trends identified in the report is that consumer spending trended downwards throughout 2024, and its growth was below headline inflation. 

Discovery Bank CEO Hylton Kallner explained that the average spend per card did not grow year over year. Spending was supported slightly by increased demand for new cards, as many looked to access additional credit and spread out their debt burden. 

The report also showed that consumers continued to hunt for value in South Africa, drawing back on discretionary spending for travel purposes and entertainment. 

These drawbacks were also used to fund increased fuel expenditure as South Africans returned to the office.

Discovery Bank also tapped into data from Discovery Insure to analyse South Africans’ driving habits further and determine why spending has increased sharply. 

Data from Discovery Insure shows that the average number of trips South Africans take per month has returned to pre-pandemic levels, indicating the end of working from home. 

It also revealed that over 60% of its clients are back in the office for a full work week, with nearly all back in the office for the majority of the working week. 

The average trip length has also steadily increased towards pre-pandemic levels, and the average kilometres travelled per month has also picked up. 

On average, in 2024, an average Discovery Insure client took 118 trips per month, drove 1,100 km per month, and spent 35 hours in the car.