Banks are progressively offering credit cards to young Russians who are below the age of 20, according to the Central Bank.
Credit Cards: The Go-To Financing Option For The Young and Restless
Youngsters under 20 have been vying for credit cards with banks, accounting for 11% of all cards issued in Q3 2024. Russian Gen Zers (aged 20 to 30) lead the pack, with a whopping 21.6% of cards issued in Q4 2024.
As for mortgages, the mortgage sector saw 68% of loans flooding into the pockets of 20 to 40-year-olds from October to December 2024, with the under-20 crowd snagging a measly 1.6%.
The Central Bank reported a decrease in borrowers from 50.6 million to 50.1 million people in the second half of 2024. Simultaneously, microloans climbed from 9.5 million to 10 million. Interestingly, 49.6% of the total bank debt is owed by borrowers juggling three or more loans. The approval rate for creditworthy individuals started recovering in Q4 2024.
Wondering why younger folks opt for credit cards? It's all about credit-building and flexible payment options.
Younger generations, specifically Gen Z, are drawn to credit cards as a way to build a solid credit history (41% of Gen Zers and 40% of Millennials). That shiny new credit score grants them access to bigger loans, mortgages, or rental agreements. Furthermore, Gen Z exhibits a preference for using credit card installment plans for impulse buys (45%) and emergencies (52%), providing smaller, manageable payments, and reducing initial financial stress.
Comparing Younger Consumers to Their Elderly Counterparts
- Credit Card Ownership Rates:
- Baby Boomers (83%)
- Millennials (74%)
- Gen Z (likely lower than 72%)
- Debt Trends:
- Only 47% of all cardholders carried a balance for more than 1 month (data from May 2024). However, younger users grapple with higher delinquency risks due to their inexperience and inflationary pressures.
- The average APR for new cards stands at a hefty 24.23%, which disproportionately impacts younger users who may lack wiggle room for lower rates.
- Loan Issuance: While credit card adoption is on the rise among younger groups, loan issuance (personal loans, mortgages, etc.) remains predominant among older, established credit users. Older generations' high credit card usage results in greater access to traditional loans, while younger users face stricter approval criteria due to the brevity of their credit histories.
In ConclusionYoungsters today are embracing credit cards for credit-building and payment flexibility, but they grapple with debt management challenges. Older demographics continue to dominate the loan market due to their longer credit histories and lower delinquency rates. Got questions? We've got answers! Drop by our Telegram channel @expert_mag for more finance insights.
Younger consumers, particularly those from Gen Z, seek microloans as a means of accessing personal finance for starting their own businesses.Regulators are keeping a close eye on the increasing number of younger borrowers opting for microloans, aiming to address the related risks and ensure creditworthiness for all applicants in 2024 and beyond.The rising credit card ownership rates among younger generations, such as Gen Z, will likely influence future trends in personal finance and loans, as these individuals look for ways to build strong creditworthiness.*Older generations, such as Baby Boomers, still maintain their leading edge in loan issuance, demonstrating a need for continued education and resources for younger consumers in the realm of finance and business.
