South African men are outstripping women by almost four percentage points when it comes to making debt and then being unable to repay it, according to a survey compiled by debt counselling company, Debt Rescue, which found that of all the applicants that signed up to go under debt review in the second quarter of this year, 52% were men while only 48% were women.
Neil Roets, CEO of Debt Rescue said they were showing a year-on-year increase of almost 25% in clients who wanted to go under debt review because they could not pay their accounts.
“There has also been an increase in the number of men and women who had fallen on hard times in the second quarter compared to the first quarter of the year.
“In Q1 the stats from the latest National Credit Bureau Monitor showed that of the 24.68m credit-active consumers 9.69 million had impaired credit records showing that they were behind with their repayments.
Total consumer debt has now peaked at R1.71-trillion (latest National Credit Regulator figure) and South Africans are now considered to be one of the most indebted nations in the world by the World Bank.
South African consumers also had one of the highest debt ratios as a percentage of GDP among emerging market economies.
According the survey the most prevalent type of debt remained personal loans (27.99%) closely followed by credit card debt (23.77%).
Many of these instruments carried extraordinary high interest making it near impossible for indebted consumers to repay them at the originally agreed terms and conditions.
“This is the primary reason why a growing army of men and women are choosing the debt review option which gives them breathing space. It allows them to repay their loans in smaller instalments over a longer period of time,” Roets said.
The 31-45 year-old group also remained the largest sector of consumers who had chosen debt review as their best option of getting out from under their debt burden Roets said.
There remained a myriad of problems on the horizon that were going to increasingly impact on consumers leading to ever higher debt-to-income ratios and more bad debts overall.
“The fact that pretty much everybody including some well-respected economists are trumpeting the 2.5% GDP growth rate that has just been announced shows a lack of understanding for where the economy is actually heading.
“Agriculture added overwhelming to this figure and that was largely the result of a bumper grain harvest which added 33.6% to the GDP.
“The harsh reality is that we would be lucky to sustain a 0.5% growth rate for the rest of the year which is further going to add to the growing unemployment rate and place increasing pressure on indebted consumers,” Roets said.
He said more people were being forced into debt because they simply could not make ends meet.
“The best advice I can give to my fellow South Africans is to try and live within their means. Avoid store cards and credit cards wherever possible. Personal loans are always a bad option because most of the short-term lenders cover their risk of granting unsecured loans by charging very high interest rates.
“You’ve got to ask yourself the question: if I don’t have the money today where is it going to come from in a few months’ time when I have to repay the loan or settle my credit card debt.
“Above all else budget and cut out all items that are not essential. Keeping up with the Joneses is always a bad idea and a good second-hand car is always a better idea that a spanking brand new car out of the box,” Roets said.