The economic slide happened so quickly that South Africans were caught off guard - despite warning signs from the US and UK.
South Africans drowning in debt were not prepared for rising interest rates, high fuel prices and other economic factors.
This month the Reserve Bank increased the repo rate by 50 basis points to 12 percent.
This raised the prime rate that banks charge their clients to 15,5 percent. For a bank customer with a R500 000 bond, it will mean an extra R200 a month and on R1-million bond a further R400.
Garth de Klerk, CEO of international credit information provider Coface South Africa, said the sub-prime issue was "conveniently ignored" during the economic boom.
Sub-prime is lending money to high-risk consumers. Several banks in the US and UK had to be bailed out after customers could not repay their home loans.
"There was a false sense of security and consumers were overspending by 16 percent to 18 percent," he said.
This was not the only reason for the current crisis, De Klerk said.
Financial institutions offering easy credit before the implementation of the National Credit Act were also to blame, along with political uncertainty.
There were no short-term solutions, he said.
"Although banks and retailers will not admit it, they allowed people to take on debt they could not afford. They knew what was going on in the global market and Iraq," said De Klerk.
Economist Ronel Oberholzer said households would increasingly feel the brunt of higher interest costs and fuel prices. "This will spill over to the manufacturing sector, while agriculture and construction are expected to keep up the growth."
Despite the bleak outlook for consumers, South Africa still has a reasonably good credit rating.
Coface assesses the business environment in a country based on factors such as whether corporate financial information is available and reliable and if the legal system provides creditor protection. There are seven levels, with A1 the lowest risk and D the highest.
South Africa has an A3 rating, the same level as China, with extensive mineral resources and diverse industry. On the down side there was a huge wage gap and a shortage of skilled labour.
"With its growing financing needs, South Africa has been vulnerable to a crisis of investor confidence," Coface said on its website.
The US has an A2 rating, compared with the A1 ratings of Japan and the UK.
However, these top performers were also under pressure, with both the US and Japan put on a watchlist.
De Klerk said this meant the countries had not been downgraded, but were being closely monitored.
Zimbabwe has a D rating and is described as a high risk, likely to default on payment.
The local situation was not likely to get better soon and the 2010 World Cup was not the saviour, De Klerk said.
Eskom's power inadequacy and tariff increases would add to the burden. Finance costs are also the highest they have been in 10 years.
"Eskom changed its mandate from providing power to making money and the pressure is now on the consumer," said De Klerk.
He said the subprime crisis in 2000 was not as quick to have a ripple effect.
"This year and next are going to be tough. There is no easy solution because there are external issues - a global credit crunch," said De Klerk.