Although consumers undoubtedly sighed with relief when the South African Reserve Bank put a brake on the increasing interest rates in July, it was not much of a reprieve for debt-ridden South Africans.

The DebtBusters Debt Index for the second quarter of this year reveals that financially burdened consumers have been relying on personal loans over the past seven years, while debt-to-income ratios for top-income earners are at all-time highs.

The findings, drawn from a quarterly review of debt-counselling applications, paint a sober picture of a nation struggling to cope with a cost-of-living crisis and little relief in sight.

Benay Sager, head of DebtBusters, says the collective impact of the 10 successive interest-rate increases since November 2021, along with rising inflation, is evident in the data.

"Average loan size has increased by 78% since 2016, and 95% of consumers who applied for debt counselling during the second quarter of 2023 had a personal loan.

"Unsecured debt was on average 26% higher than in 2016 and 39% up for those taking home R20,000 or more a month. It is abundantly clear that consumers are using unsecured credit to supplement their income."

The latest Altron FinTech Household Resilience Index, which provides more clarity on the financial disposition of households and their ability to cope with debt, showed that household financial resilience declined by 2.4% in the first quarter of this year, compared with the last...