PEOPLE WHO WEAR GLASSES NOT REPLACING FRAMES OR LENSES, BECAUSE THEY CAN’T AFFORD TO

Credit card debt had the second highest first-time default rate of 6.91%, but had improved from 7.32% in July last year.

Vehicle loans were the only type of loan where the rate of first-time defaults increased between July last year and July this year, from 2.85% to 3.13%.

The first-time default rate for home loans remained virtually unchanged at 1.84% in July.

The CDI also measures the first-time default rate of different consumer groups, which Experian bases on socio-demographics, lifestyles, behaviours and culture.

What Experian calls “Indigent township families” experienced a significant deterioration in the firsttime default rate, from 7.13% in July last year to 8.15% in July this year.

This consumer segment consists mainly of people aged 25 to 29, have limited education beyond grade 12, have an average annual household income of less than R38 200, and live in rented informal dwellings.

This segment had the worst performance with regard to first-time defaults on credit cards (12.25%) and personal loans (11.85%).

Experian said that, because people in this segment ear n low incomes, they often rely on unsecured lending to finance their lifestyle, and they may not be sufficiently financially literate to manage their debt properly.

At the other end of the spectrum, Experian found that most credit was advanced to consumers in the “Hard-working money” segment, which had total credit exposure of R203.25bn between May and July.

This segment consists mainly of educated people aged between 35 and 49 who belong to households with an average annual income of more than R150 000, and who live in houses that are not yet paid off in suburbs located around industrial and mining areas.

The CDI for consumers in this segment improved to 2.99% in July this year from 3.13% last year.

Simon Russell, the managing director of Experian South Africa, says the findings highlight the link between education and the ability to manage finances. “Education remains a recurring challenge in the South African context, and the CDI reinforces the importance of this as a fundamental foundation to tackle over-indebtedness and help drive economic growth.”

kabelo.khumalo@inl.co.za