Rising Debt Among young Czechs Fuels Concerns Over Financial Literacy
Czech Republic is seeing a concerning trend: a significant increase in debt among young adults, particularly those under 24. Collection agencies saw a record number of receivables recovered in 2023, surpassing levels seen since 2016, but the overall volume of debt recovered decreased to 30 billion crowns – a drop of three billion crowns year-on-year. Experts suggest this indicates creditors are focusing on recovering smaller debts alongside the larger ones.
Data reveals a 12% increase in “endangered debt” last year,reaching 28 billion crowns nationally. A particularly sharp rise is occurring within the youngest demographic. The total volume of unpaid debt for individuals under 24 years old has increased by approximately 25% compared to the previous year.
This trend is highlighted by statistics showing over 177,000 individuals were struggling to repay consumer debts to banks and non-banking companies in the first quarter of this year, with an average debt of 165,640 crowns per debtor.
The issue is particularly pronounced in the Liberec Region, where the average debt recovered from young peopel (18-24) is 27,900 crowns – significantly higher than the average in Prague, which stands at half that amount.
Experts warn that seemingly small debts can have long-lasting consequences. Jiří Rajl, head of a non-banking client information agency, emphasized, ”when a young person takes a loan for a new phone at the age of 22 and stops repaying it, this seeming small thing can complicate life for many years and come to hundreds of thousands of crowns.” he advocates for improved financial literacy programs to address the growing problem.
The increase in cases handled by collection agencies is also linked to a recent legal change allowing the cessation of futile executions – those where no payment has been made for six years – prompting creditors to actively pursue recovery of outstanding amounts before that deadline. The most common debts leading to collection action are unpaid bills and services, followed by consumer loans.
