Confusion, denial surround debt
March 13, 2008
By Ethel Hazelhurst
Only 13 percent of South African adults admit to being in debt - despite the fact that household debt is at historically high levels as a ratio of disposable income.
FinScope 2007 shows South Africans understand the disadvantages of owing money. In addition to those who say they are in debt, only 23 percent say they plan to borrow, while the remainder claim they are not borrowing and do not plan to.
However, people are reluctant to admit to debt, according to Rob Powell of TNS Research Surveys, so the survey undercounts the portion of the population that uses credit.
In addition to hiding debt, many people are confused about what debt is. Apparently contradictory answers to questions on credit usage show most people do not consider use of store cards as taking on debt but see them as a transactional device, according to Powell.
And 16 percent of South Africans use store card debt, while 5 percent have a loan from friends or family and 4 percent from a bank. Just 2 percent have overdrafts.
The survey reveals misconceptions about the National Credit Act, introduced last June, with 15 percent believing the act erased credit obligations.
Only 19 percent of adults save money. This includes informal savings, which can be just emergency cash kept at home.
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