Recession weans SA off credit

  1. Posted on Wednesday 27 January 2010 - 15:13
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    Peter Griffiths, AfricaNews reporter in Johannesburg, South Africa
    South Africans, hard-pressed by the effects of recession and staring at over a R1-trillion debt bill, were rethinking their exposure to credit.
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    According to the country’s National Credit Regulator (NCR) there are 17-million people, or almost a third of the population, in South Africa who are exposed to some kind of debt.

    CEO of the NCR Gabriel Davel estimates that of these there are about “a million to 1.2-million people that have got some form of debt stress”.

    Currently the NCR has 140 000 applications for debt counseling and this is expected to increase to 150 000 by the end of the year. The biggest culprit besides bonds is store cards, credit cards and overdrafts. These make up 12 percent of the R1.14-trillion debt.

    The most recent Synovate global money and finance study confirms that South African consumers are shying away from expensive credit and store cards in favour of safer debit card options. 79 percent of South Africans surveyed said that they wouldn’t spend to the extent that they did prior to the recession.

    According to companies that provide debit card solutions, the increased interest in debit cards is exciting.

    “Credit cards are losing favour globally as consumers seek to control expenditure. They've been hard hit by store and bank credit accounts over the period of the financial recession and are turning to debit and prepaid cards as a practical way to manage and prevent this,” says Alastair Campbell, sales manager at Accor Services South Africa.

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