According to the latest Credit Bureau Monitor (CBM) data, 9.76 million, which constitutes 40% of the 24.31 million credit active consumers are classified as having impaired credit records. The CBM also reflects a total of 82.42 million consumer credit accounts recorded on the credit bureau. It is no wonder South Africans are struggling to save. Many have asked the critical question: “To put money aside (saving) or to pay off existing debt?

It is hard to start the topic of saving to consumers given the levels of debt in our country. Consumers are struggling, owing a whopping R1.6 trillion in debt!

Many consumers phone or write to the Credit Ombud complaining about their unresolved disputes pertaining to credit bureau and credit agreement related matters. Some of the complaints pertain to consumers who are simply drowning in debt and are struggling to make ends meet. “For many consumers, an additional loan seems to be their best option to get themselves out of financial stress, however, this leads to a further debt spiral.”

That’s according to Mr.Nicky Lala-Mohan, the Credit Ombud, who says that many consumers think the solution to debt problems is borrowing additional money – which is not necessarily true.

 A typical case in point, is the story of *Phumzile Musina who approached our office for assistance.

*Phumzile, is a single woman, retiring from her job in the government sector next year. Although she earned a reasonable salary, she found herself struggling to make ends meet as she was the sole bread winner in her family which consisted of her parents and her adult son all, of whom suffered medical conditions. Within a period of seven months, Phumzile took five loans with one credit provider to the value of R76 000. She was desperate to cover her expenses, however, she was unable to pay regularly and soon found herself in trouble with the credit provider.  Upon investigation at our offices, it was found that Phumzile was over-indebted  thus could not afford to pay the loans. The credit provider should have given greater consideration to her expenses when conducting the required affordability assessments, as per the requirements of the NCA.  The actions of the credit provider were tantamount to reckless lending. We took the issue up with the credit provider and together with her personal circumstances being taken into account, the credit provider agreed to write off the five loans which with interest and the other charges now stood at R140 554.63. 

The relief now afforded to Phumzile is a classic example where those previous payment obligations, which amounted to approximately R5 000 are now no longer payable and could instead, be turned into a positive savings.

Consumers are renowned for taking out credit, often to their own detriment. The recent stats show that the 24.31 million credit active consumers have on average, 4 credit agreements. This makes it hard for consumers to even consider saving as they are servicing debt. What is more alarming, is consumers using debt for day to day needs like buying food and petrol on credit. This is an indication of consumers living beyond their means.

*not the consumer’s real name

The Credit Ombud office conducted a survey during June 2017 interviewing approximately 250 young people between the ages of 18 and 30 years in Gauteng.

The following simple questions were asked in the survey:

  1. Do you have debt? If so, what kind?
  2. Do you have savings?
  3. From what age did you apply for credit?
  4. What was your reason for applying for credit?
  5. What do you think Credit Bureaus do?
  6. Do you think you are negatively listed (blacklisted)?
  7. If yes – how did you find out about the negative listing?
  8. How much do you spend monthly on data?
  9. How much do you spend monthly on entertainment?

Our findings are that many of the millennials have answered ‘yes’ when asked if they have existing debt and many have answered ‘no’ when asked if they have savings.

The survey shows that they applied for credit from as young as 18years of age. The most common credit accounts they have are:

  • Cellphone contracts
  • Clothing accounts
  • Credit cards
  • Car finance
  • Personal loans

The results also show very few home loan debt, indicative that acquiring assets is not a priority. This could be so because many of them are renting or living with family.

Some of the common reasons given in the survey for obtaining credit are:

  • I wanna look good and have money”
  • “Because I was unemployed and I needed money”
  • “I was always broke because of overspending and family responsibilities”
  • “I wanted a nice car”
  • “I wanted clothing for special events and I did not have money”
  • “I wanted a credit card and a cellphone”
  • “For an emergency and I had no funds”
  • “To study”
  • “Loan and credit card to build home in the EC”

To the millennials data and entertainment is a priority where they spend an average of between R500 and R2000 per month.

The results confirmed that saving is the last thing in the minds of the millennials. These millennials want to look good, they want to wear the latest brands, carry the latest gadgets, drive nice cars and live in up-market rented apartments. “Young people have different priorities when it comes to money (data, entertainment) and saving is not part of those right now,” adds Lala-Mohan.

There are other ways of saving – given the debt crisis consumers face.

The following tips are given by the Credit Ombud for consumers to save. These include:

  • Negotiate for better interest rates – It is important for consumers to understand what the interest rates are and to negotiate for the best rates. A good credit record will also assist consumers in negotiating better rates.
  • Create a budget – The secret to having a budget is sticking to it
  • Close existing debt – This is another way of saving as debt can be very expensive when you look at the interests being charged to you. The sooner you close some debt, the more you save on future interest as certain credit agreements attract higher rates of interest.
  • Avoid using credit for day to day essentials – This might be an indication of consumers living beyond their means.
  • Have an emergency fund – This will assist you should the unforeseen happen. Many consumers who do not have funds available for emergencies find themselves having to borrow with exorbitant charges.


Consumers can contact the office of the Credit Ombud for FREE assistance if they experience any issues relating to credit agreements with non-bank credit providers such as the clothing and furniture retailers as well as micro-lenders, fraudulent listings, emolument attachment orders (“garnishee orders”) or general complaints about their credit bureaux listings. The office can be contacted on 0861 66 28 37; on the website; email us at or send a sms to 44786 and we will call you.



If you would like more information about this topic, please contact Salem Dyafta , Public Relations Manager at 0792243802 or email at