The average credit card debt in South Africa – how much we owe

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New data from consumer credit reporting agency TransUnion shows that credit applications continue to rebound amid a tough economic climate in South Africa.

New credit activity increased, despite general consumer sentiment indicating reduced spending. Credit card creation volumes – the measure of new accounts opened – rose 37.9% year-on-year in the first quarter, in stark contrast to the 42.7% year-on-year drop in creations seen in the same quarter. moment in 2021, the group said.

Credit card issuance volume has steadily increased since its low in the third quarter of 2020, indicating increased lender appetite for growth as well as increased consumer demand for credit, TransUnion said.

“However, despite the resurgence in card creations, current volumes remain below pre-pandemic levels.”

From an age perspective, 74% of all card creations came from Gen Z and Millennial consumers, indicating higher demand for credit from younger consumers and willingness from lenders to extend credit to these borrowers.

From a risk distribution perspective, consumers with credit ratings below 656 (below prime) were responsible for 66.1% of all originations for the quarter. Generation Z (born between 1995 and 2010) and Generation Y (born between 1980 and 1994) accounted for 64% of new businesses.

This aligns with the view of risk, as younger consumers are often associated with low credit scores reflecting higher risk, TransUnion said.

The average number of new credit lines decreased by 5.2% year-on-year, potentially due to higher origination volumes from borrowers below the priority rate. Account attrition remains a concern, as the total number of assets
accounts fell 2.3% year-on-year.

Outstanding balances are down 3.8% year-over-year, primarily due to six consecutive quarters of negative new business volumes between Q1 2020 and Q2 2021.

Existing account volumes continue to decline and new businesses in recent quarters have started at lower limits, the credit specialist said.

The account-level serious delinquency rate for credit cards ended the second quarter of 2022 at 12.9%, down 80 basis points from the previous quarter, but still 70 basis points higher than the previous quarter. same rate
quarter of last year, he said.

The average line of credit per account is R36,800, while the average balance per account is R21,200.


Personal Loan—Bank

Retail bank lending improved for the fourth consecutive quarter, driven mainly by younger borrowers, but remains well below pre-pandemic levels; however, opening balances for new loans are significantly higher than the prior year, TransUnion said.

The pace of recovery in the growth of retail bank loan production continued for the fourth consecutive quarter. Origination volumes increased 6.8% year-on-year to 908,000 in the first quarter of 2022. At current levels, origination volumes remain 23.4% below pre-pandemic levels.

Average origination amounts increased significantly by 14.7% year-over-year,” indicating that while lenders have increased their appetite for new business, they remain cautious in extending new credit to lower-risk borrowers.” .

Young consumers drove origination growth, with Gen Z and Millennial progenitors accounting for 62.5% of all new card accounts, an increase of 0.8% year-over-year former.

“The need for personal loan products may continue to increase in the challenging macroeconomic environment consumers find themselves in, as these products provide borrowers with an additional source of liquidity to help meet day-to-day expenses.”


Personal loan — non-bank

Origination volumes continued to recover, growing for the fourth consecutive quarter and closing the gap to pre-pandemic levels to single digits. Opening balances for new loans were also significantly higher than a year earlier, the data showed.

Non-bank personal loan originations were up 2.4% year-on-year to 2.8 million at the end of Q1 2022. At current volumes, originations are 5% below pre-Central levels. pandemic (Q1 2020).

At current volumes, creations are 5% below pre-pandemic levels (Q1 2020). Origination growth was driven primarily by younger, riskier consumers, with 52% of new business coming from Gen Z and Millennial borrowers, TransUnion said.

From a risk perspective, Subprime and Near Prime borrowers accounted for 82.6% of new business, an increase of 0.4% over the previous year.

Increases in the amount of new loans were seen across the risk spectrum, with the largest year-over-year increase seen for Super Prime consumers. The average new loan size of R6,300 increased significantly from the previous year (up 21.5% year-on-year).

“The substantial increase in new loan amounts reflects the economic environment consumers find themselves in. With record inflation, consumers are increasingly in need of additional cash to
cope with the rising cost of living. »


Read: How much money does the average South African owe for their car and house right now?

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