- Credit is increasingly used by South African households to meet basic needs, leading to rising loan defaults and deepening financial hardship.
- The National Financial Ombud Scheme warns of reckless lending practices and urges consumers to understand their rights under the National Credit Act.
- The NFO offers free dispute resolution services to protect consumers and promote fairness in the credit system.
For many South African families, credit was once a steppingstone, a way to build a better future by investing in education, starting businesses, or buying a home. Today, it has become a desperate lifeline for survival.
Increasingly, people rely on credit just to pay for essentials like food, rent, electricity, and transport. This troubling reality is pushing households deeper into financial hardship and raising serious concerns across the country.
Behind every statistic is a person, a parent choosing between feeding their children or paying back a loan, a young adult struggling to cover rent and medical bills, or a family sacrificing their dignity because the credit system failed to protect them.
TransUnion’s Q1 2025 Industry Insights Report reveals a sharp increase in serious debt delinquency. Over 41% of people with non-bank personal loans are three months or more behind on payments, the highest in over three years. Defaults on retail credit accounts are climbing too, affecting everything from clothing to store accounts. More loans mean more pressure, and more people falling behind.
Kwanda Vabaza, manager – adjudication at the NFO’s banking and credit division, emphasises the human toll: “These numbers represent families under real stress. They are using credit to survive day-to-day life rather than to grow their financial independence. When so many borrowers can’t meet repayments, it’s a clear sign that the system is failing people.”
Understanding your rights in a complex credit system
Many consumers don’t realise their rights when it comes to credit. Reckless lending, when credit providers approve loans without properly assessing a person’s ability to repay, is illegal under the National Credit Act (NCA). Yet, too often, people find themselves trapped in debt they cannot afford.
The NFO’s banking and credit division focuses on these kinds of cases, covering credit from furniture accounts to microloans and non-bank credit cards. Nerosha Maseti, who leads the division, explains: “We regularly see complaints where loans were given without proper affordability checks, leading to financial distress. Consumers deserve protection and relief. Sometimes, this means restructuring debt or cancelling it altogether.”
Complaints also frequently involve issues like expired debts being pursued, incorrect billing, and fraud, leaving consumers overwhelmed and unsure where to turn.
Consumers have the right to clear, honest information about all costs and risks before agreeing to any credit. They are entitled to loans that always make sense for their financial situation and to fair treatment.
If you are struggling with debt or suspect your credit agreement was unfair, the NFO offers free, impartial dispute resolution services to protect your rights and seek fair solutions. “You don’t have to face these challenges alone,” Vabaza says. “Our office is here to listen, support, and hold credit providers accountable.”
Smart tips to manage credit responsibly
The NFO urges consumers to approach credit with caution and care. It is vital to borrow only what you can truly afford to repay by carefully assessing your income and monthly expenses before taking on any debt. Many people fall into deeper financial trouble when they use credit to cover everyday living costs like food, fuel, or airtime. Credit should not be a tool for survival but a resource to be used wisely.
Understanding the full cost of any credit agreement is equally important. Consumers should always ask for a detailed pre-agreement statement and quotation before signing any contract, ensuring they know exactly what interest rates, monthly repayments, and total costs they are committing to. Knowing your rights under the National Credit Act is essential, including the right to fair treatment, proper affordability checks, and clear communication from credit providers.
Staying on top of repayments by setting reminders or using debit orders can prevent missed payments, while keeping all credit agreements and statements organised helps avoid unexpected surprises. If you ever feel overwhelmed by debt or believe your credit agreement may be unfair, the NFO encourages you to reach out for help. Their free, impartial services are there to support consumers, protect their rights, and promote fairness in South Africa’s credit system.
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