Easy access to credit may seem like a ‘plug’, but starting life with a negative balance after you graduate can keep you financially stuck.
- Students are falling into debt traps through easy credit access.
- Credit providers deliberately target students, who are vulnerable customers due to poor financial know-how.
- The hidden costs of affordable credit turn small purchases into financial burdens.
The new Nike Air Max 95s have dropped, and of course, this sneakerhead has got to get their hands on the hottest kicks on the block. The price of these is quite steep, but there’s a tempting alternative at the bottom of his screen to buy now, pay later.
With just a few clicks, the shoes would be his. There are many options to choose from: MobiCred, PayFlex, and PayJustNow. Add this impulsive buy to an existing The Foschini Group (TFG) clothing account, already sitting at more than R5,000, with instalments at R550 a month.
Like many South African students, they had fallen into the trap. The student credit trap.
The resurgence of youth credit
TransUnion reported that between December 2018 and December 2022, approximately 58% of South Africans began their credit journey with a clothing account.
In the second quarter of 2024, new credit originations were up to 15.2% compared to the previous year, with consumption-driven products such as credit cards, personal loans, and retail credit making up to 83% of new accounts. Millennials and Gen Z hold 62% of these accounts. Overall, this means, about 30% of South Africans are credit-active, meaning they currently have access to at least one form of credit.
Meanwhile, nearly 50% of South Africans aged 21-30 with active credit have fallen behind on at least one loan or account repayment.
Buy Now, Pay Later (BNPL) services are making debt even more mainstream. A PayFlex survey from 2022 has shown that 89% of South Africans who have used BNPL services in the previous three months intended to continue with those services, and the service achieved an impressive Net Promoter Score of +82.
This means customer satisfaction and loyalty are so high that users would recommend these services to others.
Debt diaries
“I opened my clothing account during my final undergrad year, when I was receiving NSFAS and an allowance. My income was higher, which is why the credit limit was more generous. Now I’m just watching myself drown in debt because I have neither,” said Bhongo Mahlangu, an IT graduate.
With R6,569.80 outstanding and no job, monthly instalments have become impossible to keep up with. “What seems like a small instalment at first, quickly becomes impossible when you’ve got no income,” he said.
Banks and retail stores in South Africa actively target university students with credit. Store accounts from retailers such as Markham, Edgars, and Truworths are quite popular, with statistics showing that one in four students owns a store card, yet 42% don’t know they’re liable to pay interest on top of what they owe.
BNPL services like PayFlex and MobiCred blur the lines between “affordable now” and “debt later” by normalising credit and qualifying young buyers to delay financial strain while accumulating liabilities.
It’s just sales and commission, says a salesman
“The first thing is students don’t have debt, and they’re gullible, so they’re easier to convince,” said Thabiso Moloi, an account salesman with three years of retail work experience.
Standing against the rack neatly packed with stylish denims, he hangs the new stock of jeans. “Let’s say you came in to get this pair of jeans, it’s easy to convince you to get our two for one special. You always want to be up to date with the fashion trends.”
The store account isn’t just a card; it’s a strategy to lock in loyalty early, encouraging repeat visits and larger purchases on each return.
This strategy is a double-edged sword: retailers profit by catering to students’ materialism and desire for instant rewards, while students blindly walk into a debt trap.
It starts on campus
Many students enter university relying on official financial aid like the National Student Financial Aid Scheme (NSFAS) to cover tuition fees and living expenses. However, easy access to student loans encourages additional borrowing that often goes unnoticed.
“Some of the initiatives that Wits has, currently, are [sic] the Standard Bank loan, which is an unsecured loan. We also have Fundi that students can go to,” said Ismail Soobader, board member of the South African Student Finance Forum (SASFF).
Universities directly add to the debt cycle by allowing students to register under repayment plans, carrying tuition and accommodation fees forward.
“Interest on these loans is charged if you defer on two or more repayments,” added Soobader.
This keeps students in class but often leaves graduates burdened with institutional debt, as many cannot access their academic records or certificates until balances are settled, limiting job opportunities needed to repay what they owe.
SASFF works on addressing the challenges and developing best practices in student finance administration within the higher and further education sectors in Southern Africa. A conference hosted by the organisation in September 2025, had student debt and strategies for mitigation firmly on the agenda.
Credit is a tool, not “extra income”
One of the biggest red flags with student spending is how easily credit is mistaken for “extra money”. Students swipe their store cards or sign up for the BNPL instalments without fully considering how these obligations will add up over time.
“As a student, generally your needs strip your income, and having a line of credit becomes really tempting and it lands people in trouble,” said Seth Randall, who worked as a financial advisor for more than three years.
The result is that debt, which initially seems manageable, snowballs into a monthly expense that follows them long after the purchase has lost its shine.
Randall emphasized that the key to avoiding this snowball effect lies in treating credit as a tool to build a credit score, not as disposable income.
“If you know that you’re not going to be tempted to use it inappropriately, don’t go there, until you’re earning consistently …people dig themselves into a hole they may never get out of,” added Randall.
Store accounts and BNPL services can help short term, but only if repayments are met. One missed instalment triggers penalties and a bad credit report on Credit Bureau.
Many students also underestimate how much more they end up paying when using buy now pay later services or store accounts compared to paying cash.
For example, the Nike Air Max 95s priced at R3,499.00 may seem manageable when split into instalments, but once interest charges are added, the total cost can climb to R3,799.00 or even R3,999.00.
What looks like an affordable monthly repayment quickly becomes a more expensive purchase, and this hidden cost is one of the main reasons student debts build up so quickly.
Swipe now, smile later?
According to an article by Kirsten Minnaar from The Daily Investor, nearly 45% of South Africans under 25, and approximately one million between 18 and 24, use credit out of the 20 million credit users nationwide.
For many, a retail account is the first step into the formal credit market, and when managed responsibly, it builds a positive credit history.
“I opened this account actually to work on my credit score, and I just got too carried away with the sneakers and clothes offered to me,” said Mahlangu.
Although these BNPL services seem more like a disadvantage, they can also carry advantages when used and maintained wisely. Flexibility, allowing for split instalments that are more manageable.
Additionally, BNPL services also provide short-term breathing room, allowing students to make significant and valuable purchases, such as laptops or textbooks, without depleting their cash flow all at once.
At their best, BNPL services can be a convenient budgeting tool, helping young consumers manage expenses across the month without sliding into bigger debt with credit cards.
Over upward of a million of this is unpaid, which shows that young people are struggling to keep up with their debt.
Buy now, pay later services may bring instant gratification, but for many students, it means carrying debt long before their first paycheck. The swipe today becomes the weight they drag into tomorrow.
FEATURED IMAGE: A screenshot of one of the buy now, pay later services. Photo by: Kamvelihle Mtwazi
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