Black Friday is almost upon us, bringing with it the rush of tempting deals and the promise of incredible savings. But before diving into the spending frenzy, consumers should be aware of potential financial pitfalls that could turn a tempting discount into a future debt concern. It is essential that consumers approach this period understanding the true financial landscape.
The Experian Consumer Default Index (CDI) is designed to measure the rolling default behaviour of South African consumers across various loan types, including home loans, vehicle finance, personal loans, credit cards, and retail accounts. The overall CDI for Q3 of 2025 shows a 14% year-on-year improvement in default rates, moving from 4.36% in June 2025 to 3.76% in September 2025. However, interpreting this statistic as a sign of widespread national financial stability would be a misunderstanding of complex economic dynamics.
The Perception of Improvement
This apparent improvement in the CDI is due to a significant tightening in the supply of credit. Over the past 12 to 18 months, lenders have taken a much more cautious approach, substantially reducing the amount of new credit offered to consumers. When fewer loans are issued, especially to those who might struggle to repay, fewer people naturally default. This trend reflects a cautious lending environment, not necessarily a fundamental strengthening of consumer finances.
Data shows consumer demand for credit remains very high, even surpassing pre-COVID levels. Consumers actively seek financial help to manage daily expenses, but access to credit is restricted. This imbalance between high demand and low supply reveals persistent household financial struggle, despite improved default metrics from reduced credit access.
High Limits, Higher Risk
Credit exposure, and specifically credit card exposure within financially stable households, specifically within higher-income segments, is concerning. A significant portion of credit card debt is concentrated in these groups (FAS Groups 1, 2, and 3: Luxury Living, Aspirational Achievers, Stable Spenders), which are often the focus of credit providers. The Luxury Living, Aspirational Achievers and Stable Spenders FAS segments hold R2,15 trillion of the total outstanding debt of R2.33 trillion – that is 90% of total credit exposure in the hands of ~18% of the credit active population. When looking at credit cards exclusively, this segment holds ~87% of the total R196 billion in outstanding credit card debt.
For these FAS Groups, average credit card limits have gone up by as much as 30% to 38% since before COVID, and their utilisation of these limits has increased commensurately. This suggests that many consumers, even those who seem financially secure, are increasingly relying on their credit cards to meet living expenses. What is more concerning is that these FAS groups have shown the highest growth in balances in arrears by 90+ days and both volumes and balances entering debt review, with credit cards again the main factor.
This creates a challenging scenario for Black Friday. With large amounts of credit available and already high usage, the temptation to use these limits for promotional purchases is high. The perception that a high limit equals affordability can be misleading. If credit limits are already heavily drawn upon for essential costs, additional spending may lead to increased financial difficulty. This risk is even greater for the more than 75% credit active consumers that are multi-banked, managing credit across several institutions, who show heightened distress and faster-rising default rates, indicating reliance on overlapping credit to bridge income gaps.
The Post-Holiday Debt Cycle
While interest rate reductions offer a potential reprieve, many consumers are not leveraging these benefits optimally. Instead of reallocating savings from lower interest payments on home or vehicle loans towards reducing high-interest credit card debt, these funds are frequently absorbed by increased discretionary spending. This negates the lower rates’ positive impact, perpetuating a debt cycle where the benefits are consumed by higher credit card utilisation.
Experian’s historical data consistently shows that the temporary dip in default rates seen during the Black Friday and festive season period is almost always followed by a notable increase in defaults during the first and second quarters of the new year. This pattern demonstrates that immediate holiday purchase satisfaction often leads to prolonged financial strain, with purchases manifesting as Q2 financial stress.
A Call for Sound Credit Management
Crucially, consumers should take control of their financial situation this Black Friday. The objective is not to avoid all purchases, but to make choices that protect long-term financial health. Consumers should resist promotional hype that could exacerbate default rates. Effective management requires prioritising spending within genuine repayment capacity, resisting the lure of available credit.
Acknowledging inherent risks of increased credit card limits is vital, as they can rapidly lead to unmanageable, high-cost debt. Furthermore, savings from reduced interest rates on home or vehicle loans should be strategically directed towards reducing more expensive credit card debt, not new purchases. Before buying, a critical distinction between genuine needs and wants is essential, and meticulous planning for the entire festive season and beyond, especially the typically tougher months of January and February, is paramount.
The credit economy presents significant challenges and fixing it requires a collective effort, where conscious, informed consumer behaviour plays a key role. Tools like Experian’s free web-based app, Up, are designed to help consumers manage their financial journeys with confidence. Making smart financial decisions today will be instrumental in building a resilient and stable financial future.