In the Czech Republic, an increasing number of young people aged 18 to 30 are struggling to repay their debts, particularly short-term loans.
Jana Tatyrková, the executive director of the Association of Collection Agencies, confirmed that defaults are on the rise, with a noticeable decrease in the average age of those defaulting, dropping by one to two years. Anežka Pavlíková, director of Fincollect, pointed out that most young defaulters are failing to meet obligations on loans worth tens of thousands of crowns, overdue for three months or more. Since 2019, the number of young borrowers in default has risen by 18%.
In contrast, defaults on larger consumer and mortgage loans have remained relatively stable, with a higher proportion of defaulters aged 35 and above. According to Jakub Zetek, COO of M.B.A. Finance, nearly half of the clients with overdue microloans in the past five years were under 30. Many of these young borrowers take out multiple short-term loans in quick succession, often using new loans to cover older ones, eventually leading to insolvency. Zetek attributes this to a generational shift in attitudes toward debt, explaining that younger people view non-payment as more common and less concerning than their parents’ generation.
Radek Pospíšil, sales director at Redogan, noted a nearly 10% increase in claims for microloans among people under 30 in the last six months. A more significant indicator of changing financial behavior is the rise in bankruptcies among young people, which has more than doubled, from 3% to 8%, in just one year.
Experts believe this trend reflects a growing consumer mindset among millennials, who prioritize immediate gratification over saving. Many young people are willing to take out loans for items like the latest gadgets or vacations, often overestimating their financial capacity. Pavlíková highlighted that young people increasingly prefer borrowing to saving, unlike older generations who were more inclined to wait.
A recent GfK study revealed that 60% of young people from Generation Z (born between the mid-1990s and 2010) earn below the national average, with a third of them lacking savings to cover their monthly expenses. About 11% of young respondents reported difficulty making ends meet.
