For many South Africans, the monthly budget has become an exercise in survival.
Fuel costs continue to bite. Municipal tariffs are climbing. Electricity remains expensive. Insurance premiums are rising. And now, higher interest rates are adding even more pressure to already stretched household finances.
As consumers navigate one of the toughest financial environments in recent years, experts are warning that misinformation and outdated perceptions around debt counselling could be preventing millions from accessing help when they need it most.
According to the National Debt Counselling Association (NDCA), debt counselling remains one of South Africa’s most effective tools for helping financially distressed consumers regain control of their finances, protect their assets and repay debt responsibly.
Yet despite its proven track record, misconceptions continue to discourage many consumers from seeking assistance.
The Financial Pressure Facing South Africans
In late May, South Africa’s Monetary Policy Committee (MPC) increased the repo rate by 25 basis points to 7%, following three years of rate cuts.
As a result, the commercial banks’ prime lending rate rose to 10.5%.
The MPC cited inflation at 4%, above its preferred 3% target, alongside risks associated with conflict in the Middle East and concerns about rising costs becoming entrenched in the economy.
For consumers carrying debt linked to variable interest rates, the increase has immediate consequences.
Home loans, vehicle finance agreements and personal loans become more expensive, reducing disposable income and increasing financial strain.
According to René Moonsamy, Chairperson of the National Debt Counselling Association, many households were already operating under significant pressure before the latest rate hike.
“Many households were already struggling to balance the rising cost of living and debt repayments,” she explains.
“For people with variable-rate debt such as home loans, vehicle finance and personal loans, a cycle of rising interest rates, as the Reserve Bank tries to curb inflation, could be the proverbial straw that breaks the camel’s back.”
A Lifeline That Many Consumers Overlook
For consumers facing mounting financial pressure, debt counselling offers a structured legal process designed to help them meet their obligations while maintaining financial stability.
Debt counsellors assess a consumer’s financial position, negotiate with creditors and develop affordable repayment plans tailored to individual circumstances.
Where necessary, debt counsellors can negotiate reduced interest rates on unsecured debt, such as personal loans, making repayments more manageable and helping consumers restore financial balance.
These interventions can free up income, reduce financial stress and create a sustainable path toward becoming debt-free.
Despite these benefits, the NDCA estimates that approximately three million South Africans who could benefit from debt counselling remain reluctant to seek assistance.
Myth 1: Debt Counselling Means Financial Failure
Perhaps the most common misconception is that entering debt counselling is an admission of defeat.
Many consumers fear being judged by friends, family or colleagues for seeking help.
According to Moonsamy, the reality is quite the opposite.
Choosing debt counselling demonstrates responsibility rather than failure.
Instead of avoiding debt obligations or allowing accounts to deteriorate further, consumers actively take steps to repay what they owe through a structured and regulated process.
When faced with the possibility of repossession, legal action or overwhelming debt repayments, seeking professional intervention can be one of the most financially responsible decisions a person makes.
Myth 2: You Lose Control of Your Finances
Another widespread misunderstanding is that consumers surrender control of their money once they enter debt counselling.
In reality, the process is highly collaborative.
Debt counsellors conduct confidential affordability assessments to determine whether debt counselling is appropriate and establish realistic repayment amounts.
Consumers remain involved throughout the process and continue receiving guidance and support as their repayment plans are implemented.
Debt counsellors negotiate directly with creditors, helping to secure manageable arrangements while ensuring consumers understand every stage of the process.
Rather than losing control, many consumers find they gain greater clarity and structure around their finances.
Myth 3: You’ll Never Be Able to Access Credit Again
One of the biggest fears surrounding debt counselling is the belief that it permanently damages a person’s ability to access credit.
Debt counselling typically lasts between three and five years, depending on the level of debt, negotiations with creditors and affordability considerations.
During this period, consumers cannot apply for new credit.
However, once all obligations have been successfully completed, a clearance certificate is issued and the debt counselling status is removed from the consumer’s credit profile in accordance with the National Credit Act.
Many consumers emerge financially stronger than before.
By eliminating unsustainable debt, improving financial discipline and rebuilding healthy financial habits, they are often better positioned to access financial products and potentially benefit from improved lending terms in the future.
Myth 4: Debt Counselling Is Only for Low-Income Consumers
Contrary to popular belief, debt counselling is not reserved for people with little or no income.
In fact, successful debt counselling requires consumers to have an income source that enables them to repay their debt through an affordable repayment plan.
Many participants are middle-income and upper-income earners whose debt levels have become unsustainable relative to their earnings.
The determining factor is not how much a person earns, but rather the relationship between income and debt obligations.
There is no minimum income threshold and no minimum debt requirement to qualify.
What matters is whether a consumer is over-indebted or likely to become over-indebted.
A Responsible Solution in Difficult Times
South Africa’s economic realities continue to place significant strain on households.
As interest rates, inflation and living costs rise, even financially disciplined consumers can find themselves under pressure.
Debt counselling offers a regulated and structured pathway for consumers to restore affordability, protect valuable assets and honour their financial commitments.
“The reality for South Africans is that salaries do not keep up with rising interest rates and inflation,” says Moonsamy.
“Debt counselling provides a structured way to restore affordability, protect consumers from spiralling debt and ensure creditors are repaid. Seeking help if you need it is a sustainable, responsible way to protect long-term financial well-being.”
At a time when financial stress is affecting households across the country, experts believe that replacing myths with facts could empower millions of South Africans to make informed decisions about their financial futures.
Sometimes the smartest financial move is not struggling alone—it is knowing when to ask for help.
