A snapshot survey by personal finance website JustMoney has revealed that the majority of respondents are stressed by debt. A positive finding, however, is that people are shopping around for the best interest rates, and there's a growing awareness of debt counselling and other debt solutions.
JustMoney Marketing Manager Shafeeka Anthony says, "In recognition of National Debt Awareness Month in February, JustMoney conducted a survey to find out how debt-aware our readers are. Questions included the kind of debt they had incurred and their recognition of the costs attached. Although a relatively small pool of 144 readers took part, the results were insightful."
Key takeaways from the survey included:
- Close to 90% of the respondents have some kind of debt.
- 75% are aware of the cost of their debt.
- Approximately 66% of respondents do shop around before they take up further credit.
- 69% felt stressed by their debt; yet,
- 57% are not interested in a long-term debt solution.
- More than 72% of respondents understand the benefits of debt rehabilitation.
Forms of debt
Close to 90% of readers who participated confirmed that they had some kind of debt. Of those respondents, more than 38% had both secured debt, which is debt attached to an asset, and unsecured debt, such as store cards, credit cards and credit overdrafts. Close to 33% had only secured debt, and the remaining 29% only unsecured debt. When asked whether they had ever taken out further credit to pay off their current debt, close to 61% of the readers said no. The remaining 39% said yes.
Cost of debt
More than 71% of the readers said they pay attention to interest rates when taking out further credit, while close to 29% said they didn't. A little more than 24% said they didn't know the cost of their debt in terms of additional charges and interest, while more than 75% were well aware. Close to 66% of respondents said they shopped around and compared prices when taking out further credit. Over 34% said they never shop around.
Some 69% of respondents said they felt stressed by their debt, and 31% said they were not concerned. Although stressed, more than half the respondents, at 57%, have never considered seeking professional debt help, while 43% said they have. When asked if they would be interested in a long-term debt solution, close to 57% said they would not, while more than 43% said they would be. More than 72% of the respondents said they understood the benefits that come with debt rehabilitation programmes such as debt counselling, while the remainder said they didn't.
Says Anthony, "JustMoney was established over a decade ago to help address the massive need for easy-to-understand, reliable information about personal finances, and to empower South Africans so that they can make better decisions when it comes to handling their money.
"As our research shows, people are shopping around and taking their time to compare the interest rates. We couldn't be happier because this means that our advice is being taken.
"We still have our work cut out however, as many are not sold on the idea of debt rehabilitation. They may understand its benefits, but it takes time to accept that they need help to manage their debt. By the time they seek help, it's often too late and creditors are instituting legal action against them."
She urges all who are over-indebted to seek help before a legal process is instituted.
Some signs that you need help with debt are:
You cannot keep track of which credit providers you are paying every month, and how much you are paying.
- You are unable to manage your monthly spending.
- You find yourself taking out loans to get through the month.
- The majority of your income is allocated to your debt.
- You have a judgement or default against your name.