Battling to pay your accounts? 20.66 million others are in the same boat

The South African consumer credit market took a sharp dive from March to June this year for consumers as well as credit providers. A total of 559,318 lost their classification of being in good standing, while the number of impaired accounts has increased from 19.88 million to 20.66 million in June 2020.

This means that impaired accounts increased by 779,707 from the first quarter and 506,836 compared to the same period last year, according to the National Credit Regulator (NCR).

Impaired does not necessarily indicate over-indebtedness, but rather financial distress. A consumer is classified as impaired if at least one account is three or more months in arrears, has adverse listings, or a judgment or administration order.

Nomsa Motshegare, CEO of the NCR, advises consumers who find it hard to keep up with their monthly debt payments to contact their credit providers first to negotiate for lower instalments or some kind of relief to assist them. If this fails, consumers can approach registered debt counsellors for assistance. Consumers can also claim from credit life insurance.

The NCR released its Consumer Credit Market Report (CCMR) and Credit Bureau Monitor (CBM) this morning based on the data submitted by registered credit providers and credit bureaus. Credit providers also felt the impact of the pandemic during the second quarter compared to the first quarter of 2020, as shown in the graphic.

Credit bureaus held records for 26.96 million credit-active consumers, which showed a decrease of 3.69% compared to the 27.99 million in the first quarter. The CBM also showed that 16.96 million (62.90%) of credit-active consumers were classified as being in good standing, a decrease of 3.19% from the first quarter and 3.65% compared to the same period last year. Credit active accounts decreased from 85.99 million to 85.23 million in the quarter ended June 2020. Credit reports issued to consumers decreased from 240,688 to 217 743.

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