When the same loan is needed month after month just to make it to payday, the problem may be bigger than a single unexpected expense.
That is the concern highlighted by the latest DebtBusters Q2 Debt Index, which points to growing signs of what is known as “survival borrowing” among South African households.
The term refers to using credit to cover everyday expenses when income is no longer enough to meet the cost of living.
Electricity, rates, transport and school fees are among the essential expenses putting pressure on household budgets. As these costs rise, more consumers are repeatedly turning to credit cards, overdrafts, personal loans and payday loans to cover ordinary living expenses.
But there is another important message in the data.
Not all credit is necessarily bad.
The difference lies in why the money is borrowed, whether the debt is affordable and whether it creates a financial or economic benefit that justifies its cost and risk.
The Warning Signs Are Growing
The DebtBusters Q2 Debt Index shows several indicators of increased reliance on credit.
Nearly all new debt counselling applicants now have a personal loan.
At the same time, the number of applicants with a one-month “payday” loan has reached a record 63%.
Multi-lender borrowing is also at its highest level since 2016, when the Debt Index was first compiled.
Together, these trends point to consumers increasingly using multiple forms of credit while trying to manage household expenses.
For some households, borrowing may begin as a response to an unexpected financial shock.
The danger comes when that borrowing becomes part of the monthly budget.
When Borrowing Becomes A Cycle
René Moonsamy, chairperson of the National Debt Counselling Association, draws a clear distinction between borrowing to handle an emergency and borrowing because income repeatedly falls short.
“There is a fundamental difference between borrowing R2,000 to deal with an emergency and borrowing R2,000 every month because your income doesn’t cover your expenses,” says Moonsamy.
The first situation may represent a temporary setback.
The second can indicate that a household budget is structurally unaffordable.
That distinction matters because recurring borrowing can create a cycle that becomes increasingly difficult to escape.
As Moonsamy explains, the following month begins with less disposable income because previous borrowing must be repaid.
If income does not increase, another loan may then be needed to cover the new shortfall.
The cycle can continue, with an increasing share of income being directed towards debt repayments until the situation becomes unsustainable.
Retirement Savings Can Also Signal Pressure
Borrowing is not the only warning sign.
Using long-term savings for everyday living can also indicate a recurring gap between household income and expenses.
The press release specifically identifies two-pot retirement withdrawals for day-to-day expenses as another potential sign that ordinary household costs are exceeding available income.
Recognising the pattern early can therefore be important.
Moonsamy says people experiencing these patterns should not wait until they have missed multiple payments before seeking help.
“The sooner you act, the more options there are to deal with debt,” she says.
In some circumstances, reviewing a household budget may be enough to ease temporary pressure.
Where appropriate and genuinely affordable, consolidating expensive debt may reduce costs or simplify repayments.
For people who are overindebted, debt counselling provides a regulated way to restructure qualifying credit agreements according to what they can realistically afford.
But Is All Credit Bad?
This is where the conversation becomes more nuanced.
The prevalence of survival borrowing can create the impression that credit itself is the problem.
Moonsamy says that is not necessarily the case.
There is a difference between borrowing to repeatedly cover an income shortfall and borrowing for a planned purpose that could provide a financial or economic benefit.
Examples of potentially productive borrowing include:
- Financing a vehicle to access greater economic opportunity
- Investing in education or skills
- Starting or expanding a business
However, borrowing for these purposes does not automatically make the debt productive.
The borrower still needs to be able to service the debt.
The expected financial or economic benefit must also outweigh the cost and risk of the credit.
A business loan, for example, is not automatically productive if the business fails.
Likewise, financing a vehicle to take a higher-paying job further from home does not become productive if that job never materialises.
Credit Is A Tool — The Purpose Matters
The distinction comes down to how credit is used.
Survival borrowing attempts to bridge a recurring gap between income and essential expenses.
Productive borrowing has a clear purpose, with a potential benefit that justifies the cost and risk, provided the borrower can afford the repayments.
As Moonsamy puts it: “Credit is a financial tool whose value depends on its purpose, cost, affordability and whether the borrower can afford to repay it without taking on more debt.”
That distinction is increasingly important in a household economy where essential expenses can put pressure on monthly budgets.
Credit itself is not the entire story.
The more important questions are why the money is being borrowed, whether the repayments are affordable and whether borrowing is solving a temporary problem or repeatedly covering a permanent shortfall.
For households, recognising that difference may be the first step towards understanding whether credit is serving a purpose — or simply keeping an unsustainable cycle going.
