Credit bureau, Compuscan, reveals that South Africans over the age of 60 fare best at managing their credit repayments over the festive season. On the whole though, South African credit consumers are unlikely to make it onto Santa’s good list when it comes to their credit behaviour.
According to the National Credit Regulator’s Credit Bureau Monitor for September, 47% of credit active consumers have impaired credit records – indicating that consumers are struggling to meet their credit obligations. “When we compare the performance of consumer credit accounts over the 2010 and 2011 festive seasons we see that there was a greater percentage of accounts whose profiles worsened in 2011,” says Tina-Louise Buttner, Public Relations and Marketing Communications Specialist at Compuscan. Buttner expects this trend to continue in the 2012 festive season. In 2011, 15.6% of updated and active accounts missed a payment over December or January – up from 11.7% in 2010.
Age appears to be the biggest differentiator when it comes to managing accounts over the festive season. Consumers between the ages of 18 and 29 fared the worst – with 22.7% of accounts belonging to individuals in this age bracket showing a worsened payment profile over the 2011 festive season, compared to 18.6% in 2010. In contrast, of accounts belonging to consumers over the age of 60, only 10.2% of accounts showed a worsened payment profile (an increase from 7.1% in 2010).
Over the past two years, women have fared slightly worse than men in their payment behaviour. Compuscan’s research indicates that 13.9% of accounts belonging to men and 16.9% of accounts belonging to women showed a worsened payment profile over the festive season of 2011– an increase from the 2010 numbers. “What is interesting is that in the under-30-year-old age group, accounts belonging to men and women actually fare very similarly in how they perform over the festive season,” observes Buttner. “However, this gap gradually widens as the age of account holders increases and we see the biggest difference when we look at accounts belonging to those over 60. This may show that while men and women both start out fairly poorly in how they manage debt in their twenties – men seem more adept at managing their credit as they get older.”
Buttner believes that several factors may contribute to this. “Firstly, in the younger age groups, both men and women, especially recent graduates, are most likely start their careers with similar salaries but due to a number of factors it is possible that men overtake women in salaries as they get older and thus can more readily support themselves without turning to debt. Also more recently there are more and more single women households where women are supporting their families and may not be in a position to cope financially. Women also frequently leave the work environment to focus on their families and when they return to their careers, this gap in their experience can put them on a lower salary than their male counterparts of the same age.”
Buttner says that according to research done by Compuscan earlier in the year, “consumers are more likely to default on their unsecured credit accounts such as store cards and credit cards in order to continue to pay their mortgages and vehicle finance and we do expect this trend to become even more prevalent come the festive season. All evidence points to the fact that 2012 was a difficult year for many we do expect that this Christmas might also be a difficult time for consumers.”
– Simona Levet