Banks are progressively granting credit cards to adolescent Russians aged less than 20, according to the nation's Central Bank.
Razor-sharp insights on the financial habits of Russia's younger generation unveiled!
It seems young'uns under 20 still prefer credit cards as their go-to loan, according to the latest findings. Banks have been generous with issuing credit cards to this age group, with 11% of all cards doled out in Q3 of 2024. Interestingly, the 20-30 age bracket captured the most credit cards in Q4 of the same year, at a whopping 21.6%.
Diving into the mortgage sector, borrowers aged 20-40 snagged an impressive 68% of the total loan volume between October and December 2024. Pardon me, the under 20s only managed a mere 1.6% slice of the mortgage loan pie during that period.
The Central Bank reports a decline in total borrowers by 500,000 to 50.1 million people in the second half of 2024. On the flip side, the number of Russians with microloans skyrocketed by 500,000 to a hefty 10 million by year's end. Nearly half (49.6%) of the debt to banks is held by borrowers with three or more loans. The good news? The approval rate for loan applications from borrowers with good creditworthiness has been on the mend since Q4 of 2024.
Now, let's take a closer look at the broader trends shaping Russia's financial landscape:
- Credit card lowdown: As of 2018, only around 10% of Russian payment cards were credit cards. Global sanctions and economic challenges have stalled credit card penetration, with domestic debit transactions prevailing while credit card activity wanes. The reliance on Russia's domestic payment system also limits global credit card functionality, potentially affecting younger demographics involved in cross-border e-commerce.
- Buckling under economic pressures: While Russia-specific data isn't detailed here, global trends indicate increased consumer stress through rising delinquencies in certain loan categories. This strain is amplified in Russia by currency volatility and sanctions-fueled inflation.
- Borrowing patterns: International patterns suggest younger borrowers, particularly those under 20, usually face limited access to traditional credit products and could turn to alternative financing methods. The 20-40 age group, on the other hand, is typically the core credit card demographic, but may see reduced credit limits and stricter lending standards in times of economic downturn.
As the economy undergoes changes, there's a growing shift towards domestic payment rails, potentially boosting mobile/digital wallet adoption among Russia's youngsters. Sanctions may also disrupt access to global credit networks vital for tech-savvy youth.
Without granular, age-segmented data, these findings should be treated as broad observations, influenced by Russia's unique sanctions circumstances, which likely exacerbate existing global trends of reduced credit availability during economic contractions.
- Despite frequently relying on credit cards, younger Russians under 20 may find themselves limited in accessing traditional credit products, possibly resorting to alternative financing methods like microloans in the future.
- By 2024, it's expected that the youngest borrowers might increasingly turn to microloans, given the growing number of Russians with such loans and the potential shrinking of credit card usage.
- In contrast, the 20-40 age group, traditionally the core credit card demographic, might face reduced credit limits or stricter lending standards, leading them to seek more conservative financing options in times of economic downturn.
- Considering the increasing shift towards domestic payment rails and potential disruptions in access to global credit networks due to sanctions, personal-finance businesses in Russia should focus on understanding and catering to the financing needs of the younger demographic.
