Personal credit impact

Personal credit impact

As a rule of thumb, financial advisors say you should try keep your debt commitments to one-third of your income. So, if you earn R20 000 a month, then your repayments should ideally not exceed R6000. If you can’t afford to maintain your debt, and have to borrow further to pay off existing commitments, you run the risk of entering into a debt spiral and getting stuck in a loop of growing debt.

Although mortgages (or “bonds”) make up the bulk of the national debt book by value, credit facilities (credit cards, overdrafts, store cards etc) make up 65% of our credit accounts, and unsecured credit a further 14.6% when viewed by type.

Despite tougher affordability requirements and large-scale efforts to educate consumers, credit use in the country is outpacing employment growth, and the over-indebted gap is widening.

More about SA’s debt crisis