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Consumers under pressure in South Africa

The latest TransUnion Consumer Credit Index (CCI) slid further into negative territory in the third quarter of 2013 as households continue to struggle with rising living costs.

South African money

The weak job market also appears to be taking its toll on income security.

According to Tersia van Rooyen from TransUnion, having declined to 43.4 from 44.8 in the previous quarter, the index has now been in the red – below 50.0 – for a full year.

An index above 50.0 indicates improving credit health; below 50.0 represents deterioration.

The index revealed that more consumers are defaulting on their loans. However, distressed borrowing – borrowing money from one source to pay other debt, or relying on revolving credit such as credit cards for daily living expenses – remains steady.

“Nevertheless, there is evidence that suggests that some segments of the market are increasingly resorting to distressed borrowing behaviour.

In particular, the demand for personal loans or unsecured loans is extremely strong while credit card usage remains high,’ Ms van Rooyen said.

“TransUnion has also detected a growing cautiousness among credit providers about granting credit.

Isabeau Joubert family

They appear to be doing this in an attempt to minimise their risk and avoid providing credit to consumers with impaired credit health.

“The good news is that there are steps consumers can take to improve their credit health, but it requires discipline and determination,” Ms van Rooyen added.

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