Finance

South Africans are getting deep into credit card debt

According to a report published by the credit reporting agency TransUnion, the demand for consumer credit is very high and outstanding balances are increasing.

Consumers are battling under the current economic conditions which in-turn is affecting lenders who are unable to recover their money.

The director of research and consulting for TransUnion South Africa, Carmen Williams said that during the first quarter of the year there was a significant increase of borrowing which they suspect was due to consumers making use to the credit to assist in making ends meet.

Unsecured lending products can be a vital lifeline for those who are struggling to make ends meet.

While it is important for lenders to ensure they make the credit available to consumers who require it, the risk factor needs to be considered especially during challenging economic times.

Businesstech reported that TransUnion found the average South African has an average credit limit of R30,752 and the average South African owes R16,481 on their credit card.

Credit card balances have increased by 6.6% year-on-year in the Q1 2019 which could indicate that consumers are under severe financial strain.