South Africans with credit agreements are feeling the pressure of increasing instalments of debt repayments

South Africans are financially exhausted after three tough years, surviving the Covid pandemic, growing inflation, rising interest rates, groceries and fuel price increases and living costs becoming more and more expensive, forcing consumers to cut down on essential family spending to stretch their rands and cents to afford all their many big expenses.

We can also see consumers seeking more affordable rental options as the cost of living has a put them at risk of defaulting on rental agreements and can’t afford the due annual increase.

The financial difficulties is causing more anxiety and fear in the work place as employees are concerned about the monitory problems and overburdened households that is spilling over into the work place.  The work force is under pressure and with many employees not receiving annual increases or performance bonuses due to the strain the economy is facing. Companies are not able to pay salary increases due to many financial factors.

Let us have a look at how the last interest rate increase affected consumers on a monthly income cycle.

What you should know about the interest rate increase of another .25 points:

The latest interest rate increase will for sure cause more financial fatigue in households and be the drive behind many lenders defaulting on large debt and unsecured credit agreements.

The new prime lending rate is 10.75% and the repo rate is at 7%. These interest rates aren’t negative for the banks or investors, but they’ll definitely cause anxiety for their lenders who aren’t able to cover their contractual commitments. This is the 8th interest rate hike in the past 13 months.

The increased interest rates will effect the affordability of consumers with motor vehicles, home loan finance, credit card debts, as well as unsecured loans, which are the majority lending criteria for South Africa’s employed market.

How the interest rate increase will affect you:

The interest rate on your vehicle finance should increase by R13.00 per every R1000.00 you owe.

If you bought a home in 2020 for R1 million at a 7% interest rate repo, your payment was about R7753.00 per month. NOW that payment will be R10152 per month.  Your home loan will now cost you R2399.00 per month more and for many consumers that’s a month’s groceries.

Consumers can brace themselves for another interest rate hike in March, economists warn.

Know your debt-to-income affordability:

You wouldn’t drive your vehicle on a holiday trip if you didn’t calculate whether you can afford your fuel cost for the trip and the holiday costs on food, accommodation and entertainment spending.

Add your month’s debt repayments and get your total debt expense for the month. This is a good exercise for households to know how much they are actually spending on debt repayments every month. Do the same for all service agreements and calculate whether some of the service agreements should be cancelled to free up more cash flow.

The calculation of over-indebtedness:

Divide the total debt amount you had calculated by the income before any deductions (gross income is before deductions), then multiply it by 100.

Example: Debt is R16000.00 and your income is R24000.00. Multiply it by 100 and it gives you 66% that you’re paying on debt – you are most likely over-indebted and should contact Consumer Debt Support for a meeting with a registered debt counsellor to do a debt restructuring assessment.

Ignoring over-indebtedness will only make things worse as the interest rate continue to increase, pushing consumers deeper and deeper into a financial negative that contributes to an increasing number of debt payment defaults.

Paying late on credit agreements will lead to penalties and interest. This will accumulate on your overdue accounts, making it more and more difficult to bring the arrears up to date.

Paying one payment on a vehicle can be difficult when you’re struggling financially. Now envision yourself trying to pay two arrears’ instalment’s and the contractual instalment to bring the arrears account up to date and stop legal action or voluntary repossession by the banks nominated agent to collect the said asset.

 Debt Counseling is the next step to curb over-indebtedness:

Debt Counseling has been around since 2007 and is one of the most effective debt restructuring products and services offered by registered debt counselors and regulated by the National Credit Regulator.

The program looks at your monthly income, household expenses and credit repayments. The Debt Counseling Rule System (DCRS) budget calculates a reasonable proposal that will solve the unsecured debt over a period of 60 months. The industry task team agreements make it easier and more effective to assist and support consumers that need to come into debt review.

The success percentage of consumers completing the program is high. Consumer Debt Support believes information, education and counseling are some of the key elements making debt review a product that has given many consumers new tools to budget more effectively and eventually re-apply for credit responsibly.

Contact us:

Connect with our debt counselors directly at and leave your details for a call back, we can discuss how we can assist you to reduce your monthly debt repayments and lower the interest rates on unsecured debt to almost 0%.


Take an in-depth look into your financial affairs and calculate debt affordability. Contact Consumer Debt Support for assistance and a free debt assessment for a debt restructuring outcome.

Interest rates will continually increase, making debt repayments more and more stressful. If you haven’t received a salary raise in the past three years, you should consider talking to a debt counsellor.

The National Credit Act makes it possible for consumers who need to look at their over-indebtedness to get the necessary support.  This basically forces creditors to accept proposals that solves debt over a reasonable period of time, at lower interest rates and reduced instalments, ensuring lenders can breathe again financially. The whole purpose of the debt review program is to ensure consumer can settle their debt and exit over the shortest period of time and re-enter the credit market with a repaired credit report and score.

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