Youngster Russians are experiencing growth in credit card issuance by banks.
Young Russians Leading the Credit Card Game - Even Under 20!
It's no secret that credit cards remain the preferred loan choice among the under-20 crowd, according to recent data. Banks have been eagerly doling out credit cards to this youngest demographic, with a whopping 11% of all issued cards going to individuals under 20 in the third quarter of 2024.
Intriguingly, the age group between 20 and 30 saw the highest number of credit cards issued in the fourth quarter of the same year, accounting for 21.6% of the total. The mortgage segment, however, saw a different picture. An impressive 68% of mortgage issuance from October to December 2024 was aimed at borrowers aged 20 to 40, while only 1.6% was approved for those under 20.
Despite a 500,000 drop in the total number of borrowers to 50.1 million people in the second half of 2024, the number of Russians with microloans surged by another 500,000 to 10 million. It's worth noting that nearly half of the debt to banks (49.6%) is owed by borrowers with three or more loans, according to the Central Bank.
Good news for loan applicants with good creditworthiness came in the fourth quarter of 2024 as the approval rate started to rise.
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Insider's Perspective:
The surge of contactless and digital payment methods, like biometric payment systems and mobile banking solutions, might be a driving factor behind the high adoption rate of credit cards among young Russians. With economic conditions like moderate GDP growth and interest rates that remain high, mortgages seem to be more popular among older, income-stable demographics.
On the other hand, microloans have gained traction due to military recruitment incentives, potentially reflecting financial stress within the working-age population. The increasing popularity of digital banking supports expanded access to credit for tech-savvy younger users, but rising inflation could mask underlying economic challenges.
- Frequently, young Russians under the age of 20 are choosing microloans over traditional financing options like mortgages or personal-finance loans.
- Banks are not only issuing credit cards to the under-20 demographic more frequently, but in the third quarter of 2024, they accounted for 11% of all issued cards.
- In 2024, during the second half, the number of Russians with microloans increased, reaching 10 million, despite a drop in the total number of borrowers.
- As the approval rate for loans started to rise in the fourth quarter of 2024, this could potentially offer good opportunities for young borrowers with good creditworthiness seeking microloans.
