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A credit card can be a blessing and a curse.

It’s there if you need to buy something that’s a little out of your budget, or are taking strain at the end of the month, but once you dip into that credit, you can begin to rack up debt.

Debt is arguably one of the worst four-letter words out there, and something that many South Africans have had to confront over the course of the pandemic.

TransUnion’s latest South Africa Industry Insights Report covers a period when unemployment in South Africa hit a new record high, a fact reflected in the key consumer credit market indicators.

The report, which looks at the fourth quarter of 2020, is an in-depth, full population-based report that provides statistical information every quarter from TransUnion’s national consumer credit database aggregated across virtually every active credit file on record.

This includes data across a range of sectors including major lending categories like credit cards and personal loans.

Here are the report’s credit card metrics:

Image: TransUnion Industry Insights Report Q4 2020

That’s seven million accounts, with a staggering overall outstanding balance of R134 billion, averaging out at just more than R19 000 an account.

If you consider that South Africa’s most recent Take-home Pay Index puts the average take-home salary in South Africa at R15 821 in February 2021, that debt figure is all the more worrying.

Challenging times have meant that household finances have been stretched, and both consumers and credit providers have been taking a cautious approach.

Lenders are therefore focusing more on low-risk consumers who can pay off their debt more easily.

As a consumer, the more credit card debt you accumulate, the harder it is to pay it off, while the interest on what you owe grows.

This could account for why zero-interest payment solutions like PayJustNow are proving very popular right now, offering South African consumers an alternative to credit in the form of a dynamic tech-enabled payment solution, based on a widely used and internationally validated ‘buy now, pay later’ business model.

What does that mean in simple talk? This payment option allows shoppers to split their purchase over three equal instalments, spread over three months, with zero interest.

This makes it easier to budget for items, rather than paying for them in one go on your card.

Interest – zero. Hidden fees – zero.

A nice alternative to credit card swiping, if you’re looking to move away from that way of spending.

However you choose to manage your money, manage it wisely.

[source:transunion]