{"id":50646,"date":"2023-06-29T21:09:52","date_gmt":"2023-06-29T21:09:52","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/new-store-accounts-are-surging-as-cash-strapped-south-africans-buy-on-credit"},"modified":"2023-06-29T22:24:10","modified_gmt":"2023-06-29T22:24:10","slug":"new-store-accounts-are-surging-as-cash-strapped-south-africans-buy-on-credit","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/new-store-accounts-are-surging-as-cash-strapped-south-africans-buy-on-credit","title":{"rendered":"New store accounts are surging as cash-strapped South Africans buy on credit"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>More South Africans are turning to store accounts to buy clothes and food on credit \u2013 while the demand for credit cards is soaring among young people, a new report shows.<\/p>\n

Consumer credit report group TransUnion found that the number of new retail revolving accounts surged by 35% in the first quarter of 2023 compared to a year before, along with “significant” growth in clothing accounts.<\/p>\n

“The trends indicate a shift from cash to credit purchases in response to ongoing economic pressures,” the report states.<\/p>\n

Existing account holders are also using more credit due to higher prices, says TransUnion Africa’s financial services research and consulting director Weihan Sun.<\/p>\n

But lenders and retailers are shifting towards low-risk customers.<\/p>\n

TransUnion said the number of “subprime” account originations declined by 5.4% over the past year. On the other hand, lower-risk consumers received higher limits when they applied for these credit products \u2013 which fuelled a 2.5% year-on-year increase in new account limits overall.<\/p>\n

The demand for credit cards also continued across all generations, growing 27% year-on-year. Younger consumers \u2013 those roughly below the age of 40 \u2013 contributed to over two-thirds of new credit card originations.<\/p>\n

Non-bank personal loans also saw significant growth, with volumes rising by nearly 25% year-on-year.<\/p>\n

But TransUnion flagged a “concerning” 11% year-on-year increase in one-month overdue accounts on the credit card market. Non-bank personal loans also recorded a 170 basis points increase in serious account-level delinquencies (when the client falls behind monthly payments).<\/p>\n

Across all credit products, however, delinquency rates improved in the first quarter of 2023.<\/p>\n

One interesting trend in the first quarter was the expansion of the home loan market, despite the rising interest rates.<\/p>\n

“Many of these purchases are led by the current semigration trend, supported by continued remote working strategies, with the most popular destinations being Gauteng, KwaZulu-Natal, and the Western Cape, with the North West being sought after too, thanks to more accessible property affordability,” said Sun.<\/p>\n

But the credit bureau flagged signs of potential strain on consumers’ ability to repay loans. On home loans, accounts with a single month of missed payments increased by 25%.<\/p>\n

It says lenders need to monitor that trend closely as rates rise to prevent the progression of this strain into serious defaults.<\/p>\n

The report does not yet reflect the additional strain of two rate hikes of 50 basis points each, announced on 31 March and 26 May.<\/p>\n

Vehicle finance has already taken a big knock, with TransUnion recording a 6.8% decline in origination volumes compared to the first three months of 2022. That sector also saw an “alarming rise” in first-month defaults. TransUnion believes that vehicle and asset finance lenders will need more effective impairment management as interest rates continue rising.<\/p>\n

For More News And Analysis About South-Africa<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. More South Africans are turning to store accounts to buy clothes and food on credit \u2013 while the demand for credit cards is soaring among young people, a new report shows. Consumer credit report group TransUnion found that the number of new retail revolving accounts surged by 35% in the first quarter […]<\/p>\n","protected":false},"author":84,"featured_media":50645,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[274,315,4115,5665,1814,5083,5666,275,888],"class_list":["post-50646","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-south-africa","tag-credit","tag-credit-cards","tag-home-loans","tag-lending","tag-personal-loans","tag-south-africa-2","tag-transunion"],"yoast_head":"\nNew store accounts are surging as cash-strapped South Africans buy on credit - South Africa<\/title>\n<meta name=\"description\" content=\"More South Africans are turning to store accounts to buy clothes and food on credit \u2013 while the demand for credit cards ...\" 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