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We take a look at South Africa's credit card transactions. Not only the number of transactions that are taking place using credit cards, but the total amount of money spent on credit cards as well as the average Rand value spent per transaction.
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South Africans not shy to use their credit cards
Gone are the days in which a credit card was only used in emergencies to pay for unexpected expenses such as fridge breaking down, or a car that needs an expensive service or repair. South Africans like swiping their credit cards. Ever wondered how many credit card transactions takes place in South Africa on a monthly basis? the line graph below shows not only the number of credit card transactions that takes places every month, but also the total value of money spent per month on credit cards.
In January 2012, there were 27.76 million credit card transactions that took place, and the total Rand value spent on credit cards January 2012 amounted to R13.97 billion (at an average per transaction of R503.00) per transaction. Hardly big amounts spent per transaction. So it does not look like credit cards are used as a last resort to pay for large unexpected expenses. So in January 2012 a credit card was swiped at least once a month for every two citizens in South Africa.
Lets fast forward to June 2018. In June 2012 there were 52.52 million credit card transactions (almost 1 transaction per month per citizen in South Africa). And the value of all the credit card transactions that took place during June 2018 amounted to R29 billion (at an average of R552 a transaction). So while the value per transaction on credit card did not grow by much since January 2012 to June 2018, the frequency of credit cards being used increased substantially. Is this a sign that more and more consumers are using their credit cards to fund their daily spending such as food, toiletries and other day to day expenses? It sure looks that way.
Data from the South African Reserve Bank (SARB) shows that debt and debt repayments makes up 71.3% of total household income (As at February 2018). So basically of the 100% of money households have to spend, debt makes up 71.3% of that money. Leaving only 28.7% of earned income by households to pay for education, food, groceries, entertainment, and other living expenses. And the fact that interest rates were increased recently means that debt as percentage of disposable income will increase as debt and debt repayments became more expensive with the latest interest rate hike.
South African consumers are struggling and there seems to be very little light at the end of the tunnel for them. With load shedding reducing chances of economic growth and job creation, less money and profits earned by businesses due to load shedding, inflation on the increase, interest rates increasing, there seems little to no respite to battered and bruised South African consumers and some of them see no other way to buy and provide for their families other than using their credit cards to pay for daily goods and services.
Lets fast forward to June 2018. In June 2012 there were 52.52 million credit card transactions (almost 1 transaction per month per citizen in South Africa). And the value of all the credit card transactions that took place during June 2018 amounted to R29 billion (at an average of R552 a transaction). So while the value per transaction on credit card did not grow by much since January 2012 to June 2018, the frequency of credit cards being used increased substantially. Is this a sign that more and more consumers are using their credit cards to fund their daily spending such as food, toiletries and other day to day expenses? It sure looks that way.
Data from the South African Reserve Bank (SARB) shows that debt and debt repayments makes up 71.3% of total household income (As at February 2018). So basically of the 100% of money households have to spend, debt makes up 71.3% of that money. Leaving only 28.7% of earned income by households to pay for education, food, groceries, entertainment, and other living expenses. And the fact that interest rates were increased recently means that debt as percentage of disposable income will increase as debt and debt repayments became more expensive with the latest interest rate hike.
South African consumers are struggling and there seems to be very little light at the end of the tunnel for them. With load shedding reducing chances of economic growth and job creation, less money and profits earned by businesses due to load shedding, inflation on the increase, interest rates increasing, there seems little to no respite to battered and bruised South African consumers and some of them see no other way to buy and provide for their families other than using their credit cards to pay for daily goods and services.