DR: New survey shows South Africans are getting ever deeper into debt

Shocking statistics compiled by one of South Africa’s largest debt management companies has shown that consumers owe more than 75% of their monthly pay checks to creditors. It had also shown that South Africans are woefully ignorant of their rights in relation to expired (prescribed) debt that does not have to be repaid and the fact that credit providers are not allowed to collect on this debt. Neil Roets, CEO of Debt Rescue said his company had shown a new client growth rate of more than 31% in the first six months of this year compared to the same period last year. “This is clear evidence that a growing number of consumers are getting ever deeper into debt and need help from debt counsellors to get out from under the debt mountain most of them had accumulated over the past years.” He said the majority of clients (53%) were in the age group 31-45 while there had been a substantial spike (39%) in applicants who wanted to go under debt review who were under the age of 25. There had been a 3% increase in male applicants, from 54% to 57% while there had been a 23% increase in applicants with a nett income greater than R10 000 a month. “Those consumers who are struggling to pay their home loans currently stand at 56.86% while consumers who are battling to pay off their credit card debt are running at 58.83%. The survey showed that a shocking 38.67% of consumers who had bank accounts did not know what interest rate they were getting on their savings accounts. A meagre 23,37% of respondents admitted to checking their bank statements at least once a month while 22.19% said they had no idea of what they were paying in banking fees. Only 23.42% of respondents said they had any money left at the end of the month. “This lax attitude to ensuring consumers were not being overcharged by banks and that no spurious charges were being billed to their accounts is a matter of great concern. “It is indicative of a lack of education and awareness of how important it is to understand at least the basics of financial management. “We have found in our dealings with thousands of deeply indebted consumers over the years that a lack of understanding of simple things like credit agreements that were often very one sided and downright unfair played a major role in consumers becoming over-indebted in the first instance,” Roets said. On the positive side, the survey showed that responsible borrowing could have a positive impact on the lives of consumers. “A disturbing aspect of the survey was the fact that 44.14% of consumers who were polled in the survey said they were constantly worried about their outstanding debt with 31.02% of respondents admitting that their indebtedness had a negative effect on their relationships with their spouses.”

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