SPENDING AND SAVING: Use loans and credit wisely and avoid falling into the debt spiral

The debt spiral does not usually begin with a shopping spree, but a gap. This could be the gap between payday and month-end, the gap between a salary increase and the real cost of groceries, transport, rent and electricity, or the gap between what a household earns and what life now costs.

Benay Sagar, chief executive of DebtBusters, says the warning sign is simple: “If you ever find yourself borrowing to pay off previous debt, the first thing to do is to recognise the cycle and stop it immediately, if you can.”

The pressure is not imaginary. TransUnion’s 2026 Consumer Pulse Study for the second quarter found that 39% of South Africans expect to miss at least one bill or loan repayment, and 79% rank inflation among their top three household financial worries. It also found that 53% of consumers had cut discretionary spending such as eating out, travel and entertainment.

“Consumers are still managing, but the margin for error is shrinking,” says Ayesha Hatea, director of research and consulting at TransUnion South Africa. Even modest increases in essential costs are forcing difficult trade-offs, which is reflected in lower confidence and more cautious credit behaviour.”

Looking ahead, the TransUnion survey found that financial optimism declined to 66%, down from 71% in the second quarter of 2025, and pessimism increased to 19% from 15%. Income expectations also weakened, with 70% of consumers expecting their household income to increase over the next 12 months, compared with 75% a year ago.

The Standard Bank Youth Barometer shows that younger consumers are not all using credit recklessly. Under-35s often use credit cards to manage cash flow and earn rewards, and people in their early thirties are increasingly using personal loans to consolidate more expensive debt into one repayment. Used properly, credit can help, but if credit is used badly, it quickly becomes a problem.

The 2026 Sanlam Benchmark Survey adds a retirement warning. Kanyisa Mkhize, chief executive of Sanlam Corporate, says people are making retirement decisions “in a very difficult economic environment” and need help to “manage debt before it spirals”.

Anna Siwiak, head of product development at Sanlam Umbrella Solutions, says advice should not arrive only at retirement. “Advice is not a one-off event at retirement,” she says. It should help members to “preserve savings when they change jobs, manage debt before it spirals and make ­confident choices”.

Defeating the spiral starts with naming it. Consumers can start by listing every debt, its interest rate and its repayment. Then tackle the most expensive debt first while keeping essentials paid. And avoid using new debt to service old debt. DM

This story first appeared in our weekly DM168 newspaper, available countrywide for R35.