South African consumers are optimistic as financial confidence grows, yet challenges surrounding credit access and digital fraud remain critical concerns to be addressed. Picture: Pixabay
Transunion’s Consumer Pulse Study for Q4 2024, shows that consumer confidence in income growth is higher than in previous quarters, with 79% of respondents expecting their income to increase in the coming year.
This is an increase from 76% in Q3 2024, and from 74% in Q4 2023.
On the other hand, 20% of households reported a decline in income in Q4, a slight improvement over the previous quarter, while 42% of households said their income remained the same.
Optimism about income is particularly strong among younger generations, with 86% of Gen Z and 85% of Millennials anticipating improved earnings.
Fatgie Adams, Head of Credit Risk Solutions,TransUnion Africa said: “Our findings indicate that while financial stability and optimism are growing, there’s still concern around critical themes like inflation and credit access, where consumers continue to feel the economic pressure.”
South Africa’s easing inflation, down to 3.8% in September 2024 along with 0.25% interest rate cut in the same month have contributed to this positive outlook.
According to Adams, with some economists expecting inflation to slow further in Q4, consumers are gaining greater financial stability.
Plus, 76% of respondents expressed optimism in their household finances, a five-percentage point increase from the previous year. This reflects an overall trend toward greater resilience.
The TransUnion study highlights a trend of consumers making debt repayments and savings a priority especially with the younger consumers.
In Q4, 65% of respondents reported being able to pay their bills in full. This a six-percentage point year-on-year increase, with Gen Z and Millennials leading the trend.
Meanwhile, 52% of consumers have reduced their discretionary spending, with Gen X and Baby Boomers consumers most likely to make adjustments.
The most common cost cutting measures are: reductions in digital services (26%) and cancelled memberships (30%).
Consumers are also shifting their focusing on building their emergency savings with 36% of Gen Z and 30% of Millennials increasing their contributions to emergency funds or stokvels in Q4, with 28% of all consumers prioritising this goal.
Retirement savings saw a similar increase, with 24% of consumers contributing more than in previous quarters.
“The shift toward building financial resilience is significant, especially as younger generations balance immediate debt obligations with future savings,” Adams said.
According to the report, the top priority for South African consumers is credit access, with 93% indicating that access to credit is crucial for achieving financial goals.
Only 38% feel they have adequate access which is a slight decline from Q3.
There was an increase in demand for new credit with 37% of consumers were planning to apply for new credit within the next year.
Interest in new credit is strongest among Gen Z (41%) and Millennials (45%) consumers, with credit cards, personal loans, and ‘buy now, pay later’ services are among the most sought-after options.
However, 54% of respondents ultimately decided not to pursue credit applications, with consumers (31%) citing the high cost of credit as a deterrent, even after the recent interest rate cut.
These findings underscore a disconnect between consumer demand for credit and the challenges posed by high costs and economic uncertainty, according to the report.
Digital fraud remains a prevalent issue, as 13% of SA consumers reporting that they fell victim to fraud in Q4, a three percentage point hike from Q3.
Younger generations showed an increased awareness of fraud risk and are more likely to monitor their credit reports.
The report showed that 57% of all respondents check their credit report at least monthly, while 63% of Gen Z and 69% of Millennials do the same.
Common scams include:
– money and gift card schemes
– smishing (fraudulent text messages)
– phishing (fraudulent emails, websites, social posts and QR codes).
Despite these proactive steps, 60% of consumers were uncertain about how to protect themselves which highlights the need for more comprehensive guidance on digital security.
Due to rising cyber-crime, 52% of consumers changed their passwords for potential compromised accounts, and 41% reviewed their credit reports for any unusual activity.
Adams said: “The rise in fraud awareness is encouraging, but there’s still a clear need for stronger consumer education on digital safety practices.”
South African consumers plan to make targeted adjustments in their budgets with reducing discretionary spending, increasing retirement savings, and holding back on large purchases in the months ahead being on top of their lists.
This reflects a continued trend toward cautious financial management and a growing emphasis on future financial security.
“The Q4 findings demonstrate that South Africans are becoming more financially resilient and proactive, but challenges remain, particularly in areas like credit access and digital security,” Adams said.
“As we move into 2025, empowering consumers through financial literacy, secure digital tools, and accessible credit will be essential in helping them achieve financial stability and growth.”
IOL Business
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