Borrowing Is Becoming Strategic - Not Just About Survival
Recent data reveals a shift in why South Africans are turning to credit: it's less about emergencies and more about achieving goals and managing finances smartly. Analyses from TransUnion’s Q1 2025 Industry Insights Report and FinScope Consumer South Africa 2023 data highlight key motivations behind taking out personal loans, credit cards, and other loan products.
Credit Card Use Is on the Rise
TransUnion reports that in Q1 2025, credit card originations jumped 30.7% year-over-year, signalling growing demand. However, lenders appear cautious - they’re issuing lower credit limits on new accounts, even as total outstanding balances surpassed R182.97 billion, a 7.1% rise over the prior year.
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Number of accounts: 7.28 million active cards (+3% YoY)
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Average balance per account: R25,120 (+3.95% YoY)
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Average new account limit: R24,990 (down 13.1% YoY)
In short, more South Africans - especially younger or near-prime borrowers - are using credit cards, but banks are tightening new credit just enough to manage risk.
Personal Loan Boom: Banks vs Non-Bank Lenders
The personal loan market is splitting into a fork:
Bank-issued loans
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Accounts declined by 4.44% YoY to 5.64 million
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Outstanding balances hovered around R289.72 billion
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Average new loan size jumped 15.6% YoY to R25,250
This suggests consumers are applying for fewer loans—but when they do, the amounts are more substantial, likely for major expenses like debt consolidation, home renovations, or tuition.
Non-bank (digital/alternative) loans
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Account numbers surged 14.3% YoY to 7.63 million
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Average loan size dropped 11.4% to R12,160 SowetanLIVE
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Origination volumes climbed 11.5% YoY
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But delinquency is rising—balance-level delinquencies reached a high of 41.7%
These numbers indicate increased use for smaller, short-term needs - groceries, emergencies, or everyday expenses. Unfortunately, the high delinquency rates suggest borrowers are often struggling to keep up.
Borrowing to Stay Afloat: FinScope Snapshot
Insight from FinScope Consumer SA 2023 paints a vivid picture of financial stress:
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Living costs made up 85% of household income - 30.4% food, 11.5% energy, 9.1% transport, 8.8% communication finmark.org.za
This highlights how debt - particularly small loans - is being used to cover critical needs, not luxuries. It also underscores the importance of having regulated, transparent lending options.
Inferred Motivations Behind Borrowing Patterns
Based on available data, here are the key borrowing trends in 2025:
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Goal-driven personal loans: Increased average loan sizes suggest South Africans are funding education, home improvements, or consolidation efforts.
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Short-term relief via non-bank loans: Smaller, rapid loans are filling gaps -though at higher risk of repayment issues.
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Credit cards as liquidity buffers: Rising account numbers and balances indicate cards are being used for everyday transactions, whether for convenience or necessity - but lenders remain cautious.
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Emergency credit remains prevalent: Borrowing for basic needs, especially food and utilities, continues for many households.
The latest data shows that borrowing in South Africa is no longer just a quick fix for emergencies but a deliberate financial strategy. From consolidating debt to funding education or tackling much-needed home renovations, credit is helping many South Africans move forward despite rising living costs. However, the challenge lies in choosing credit solutions that are not only transparent but also tailored to your needs.
This is where regulated, reliable lenders make a difference. RCS, a renowned registered credit provider in South Africa, offers personal loans with fixed repayment terms, quick online applications, and amounts from R2000 up to R300 000 - helping you achieve your goals with confidence and clarity.
Whether you’re planning a wedding, dealing with an emergency or need some home upgrades, a personal loan with predictable terms can be a smarter way to take control of your finances.
In 2025, borrowing is all about being strategic. With the right tools and the right lender, credit can become a stepping stone to stability and growth—rather than a burden.
