South African Consumers Show Growing Optimism and Financial Resilience Amid Economic Improvements

TransUnion Consumer Pulse Study finds increased confidence in South African household finances, despite ongoing concerns about inflation and access to credit

• 79% of South African consumers expect their income to increase in the next year, especially Gen Z and Millennials.
• 65% of consumers expect to be able to pay their bills in full in Q4, marking improved sentiment from one year ago, when 59% of consumers said the same thing.
• Digital fraud remains a concern with 13% of consumers falling victim to scams, highlighting a need for increased cybersecurity awareness and protection.

Among signs of economic recovery, South African consumers are feeling more optimistic about their financial future, with a notable rise in household income expectations and stability in debt management. These are among the insights in the Consumer Pulse Study for Q4 2024, published by information and insights company TransUnion, which explores consumer sentiment, behaviour, and emerging financial trends in South Africa*.

“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,” said Fatgie Adams, Head of Credit Risk Solutions at TransUnion Africa.

Financial Optimism and Income Outlook on the Rise
The report 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, up from 76% in Q3 2024, and from 74% in Q4 2023. Twenty percent of households reported a decrease in income in Q4, a small 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[1] anticipating improved earnings.

South Africa’s easing inflation, down to 3.8% in September 2024 (the lowest since April 2021[2]), and a 0.25% interest rate[3] cut in the same month have contributed to this positive outlook. With some economists expecting inflation to slow further in Q4, consumers are gaining greater financial stability. In addition, 76% of respondents expressed optimism in their household finances, a five-percentage point increase from the previous year, reflecting an overall trend toward greater resilience.

Spending and Financial Priorities Shift Toward Debt Repayment and Savings
The study highlights a trend of prioritising debt repayment and savings, particularly among younger consumers. In Q4, 65% of respondents reported being able to pay their bills in full, a six-percentage point YoY increase, with Gen Z and Millennials leading the trend at 68% and 66%, respectively. Meanwhile, 52% of consumers have cut back on discretionary spending, with Gen X (65%) and Baby Boomers (62%) the most likely to make adjustments. Reductions in digital services (26%) and cancelled memberships (30%) were among the most common cost-cutting measures.

A growing number of consumers are also focusing on building emergency savings. Thirty-six percent of Gen Z and 30% of Millennials increased 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% 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,” said Adams.

Slight Decline in Credit Access and Growing Demand for New Credit
Credit access remains a top priority for South African consumers, with 93% indicating that access to credit is essential for achieving financial goals. However, only 38% feel they have adequate access, a slight decline from Q3. Demand for new credit has increased, with 37% of consumers planning to apply for new credit within the next year. Interest is strongest among Gen Z (41%) and Millennials (45%), with credit cards, personal loans, and ‘buy now, pay later’ services among the most sought-after options.

Despite this demand, 54% of respondents ultimately decided not to pursue credit applications, with 31% citing the high cost of credit as a deterrent, even after the recent interest rate cut. Other factors included finding alternative funding sources (30%) and concerns about income or employment stability (28%). These findings highlight a disconnect between consumer demand for credit and the challenges posed by high costs and economic uncertainty.

Increased Vigilance in Identity Protection Amid Rising Digital Fraud
Digital fraud remains a prevalent issue, with 13% of South African consumers reporting they fell victim to fraud in Q4, up three percentage points from Q3. Younger generations, who are more likely to monitor their credit reports, showed a higher awareness of fraud risks. The study found 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), and phishing (fraudulent emails, websites, social posts and QR codes).

Despite these proactive steps, among those who haven’t acted on cybersecurity concerns, 60% were uncertain about how to protect themselves, underscoring the need for more comprehensive guidance on digital security. With the increase of cybercrime, 52% of consumers reported changing passwords for potential compromised accounts, and 41% reviewed their credit reports for any unusual activity. “The rise in fraud awareness is encouraging, but there’s still a clear need for stronger consumer education on digital safety practices,” noted Adams.

Looking Ahead: Financial Strategies for Q1 2025
In response to anticipated financial pressures, South African consumers plan to make targeted adjustments in their budgets. Top priorities include reducing discretionary spending (46%), increasing retirement savings (42%), and holding back on large purchases (41%) in the months ahead. This focus 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. 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,” said Adams.

Consumers are eligible to receive one free credit report every 12 months. Consumers can get their free annual credit report from TransUnion here.

* TransUnion’s Consumer Pulse survey of 1,000 adults was conducted 25 Sep.–9 Oct. 2024 by TransUnion in partnership with third-party research provider, Dynata. Adults 18 years of age and older residing in South Africa were surveyed using an online research panel method across a combination of desktop, mobile and tablet devices.

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