File image: Credit cards. IOL.

CAPE TOWN - Tough economic times have left consumers battling to stay financially afloat. 

This is evident in outstanding consumer debt. 

Around R13.6bn worth of consumer accounts were not paid in time this July 2017, according to the newly-launched Experian Consumer Default Index, which measures the behaviour of credit-active consumers across formal lending sectors. 

Although this figure is high, it is an improvement compared to July 2016. 

South Africa's debt statistics are shocking with 14.7 million consumers in possession of credit card accounts and home, vehicle and personal loans.

Notably, South Africa collectively owes around R1.54 trillion in outstanding debt. Of this amount, consumers have defaulted R13.6bn in July this year.

"We’ve seen significant regulation introduced into the market, particularly the affordability guidelines, as well as a reduction in the caps applied to products and the interest rate reduction has decreased the ability of lenders to price for risk adequately", said Esperian chief data officer, David Coleman.

Debt trend is measured per geological group, using an instrument called mosaic. 

According to this instrument, consumers with less education, battled to service their debt and experienced more credit defaults.

"There is a correlation between education and what’s available and how you behave and perform in terms of your credit default. We don’t notice a particular ethnicity or one gender type... so there’s no skew really, except from a population size perspective", says Experian's head of marketing, Riona Naidu. 

Similarly, one of South Africa's largest retailers, Edcon has lost nearly 400 000 customers from October to December last year, according to Business Report. 

Edcon noted a loss of 382 000 customers during the three-month period, blaming the National Credit Regulator’s new affordability regulations. 

The retailer expressed their plans to enter a new credit initiative with Absa. 

Absa was reportedly set to book approximately 20% of new credit accounts.

The retailer giant reported a gross profit decline of 11%, which translated to R2.9 billion. This caused the company's trading profit to decline by 67% to R253m.