CAPE TOWN- Men are still outstripping women by almost four percentage points in creating debt that they are unable to repay.
According to a survey compiled by one of the largest debt counselling companies in South Africa, it was found that of all the applicants that signed up to go under debt review in the second quarter of this year, 52% were men while only 48% were women.
CEO of Debt Rescue Neil Roets said they were showing a year-on-year increase of almost 25% in clients who wanted to go under debt review because they could not pay their accounts.
“There has also been an increase in the number of men and women who had fallen on hard times in the second quarter compared to the first quarter of the year.
“In Q1 the stats from the latest National Credit Bureau Monitor showed that of the 24.68 million credit-active consumers, 9.69 million had impaired credit records showing that they were behind with their repayments,” said Roets.
The survey further found that a total consumer debt has now peaked at R1.71 trillion (latest National Credit Regulator figure) and South Africans are now considered to be one of the most indebted nations in the world by the World Bank.
South African consumers also had one of the highest debt ratios as a percentage of GDP among emerging market economies.
Furthermore, the most prevalent type of debt remained personal loans at 27.99%, closely followed by credit card debt at 23.77%.
Many of these instruments carried extraordinary high interest making it near impossible for indebted consumers to repay them at the originally agreed terms and conditions.
“This is the primary reason why a growing army of men and women are choosing the debt review option which gives them breathing space. It allows them to repay their loans in smaller instalments over a longer period of time,” Roets said.
The 31-45 year-old group also remained the largest sector of consumers who had chosen debt review as their best option of getting out from under their debt burden Roets added.
He said that more people were being forced into debt because they simply could not make ends meet.
“The best advice I can give to my fellow South Africans is to try and live within their means. Avoid store cards and credit cards wherever possible.
“Personal loans are always a bad option because most of the short-term lenders cover their risk of granting unsecured loans by charging very high interest rates.
“You’ve got to ask yourself the question: if I don’t have the money today where is it going to come from in a few months’ time when I have to repay the loan or settle my credit card debt.
“Above all else budget and cut out all items that are not essential. Keeping up with the Joneses is always a bad idea and a good second-hand car is always a better idea that a spanking brand new car out of the box,” Roets said.