They can't borrow: How banks are robbing young people of a credit future
The delinquency of the Zoomer generation in the bad debt portfolio more than doubled from 3% to 7%, VTB said. This is an expected effect of the banks' policy. Last year, because of the Central Bank's restrictions on lending to borrowers with high debt load, they targeted the youngest citizens 18-19 years old, who are just entering adulthood. Cards with very substantial limits are being distributed to this age group left and right. Lack of financial literacy and life experience leads to a frivolous attitude towards servicing obligations. As a result, a significant part of this generation has already ruined their credit history, which closes their access to mortgages and other loans for many years. Life stories, banks' practices and reasons for the Central Bank's inaction - in an article by Izvestia columnist Anna Kaledina.
Why banks give credit cards to young people without income
In the fall of last year Izvestia already raised the topic of young people and credit cards. And the Central Bank paid attention to the trend. In one of the reviews of the banking sector, the regulator noted that in the first half of 2024, the share of issuing credit cards to citizens under 20 years old (that is, 18-19 years old, because loans are available by law only from 18) increased by almost 8 p.p. and amounted to 11% of the total volume. The total number of people of all ages with credit cards reached 28.6 million. That is, banks issued millions of credit cards to young people 18-19 years old in a fairly short period of time. According to Rosstat, by the way, at the beginning of last year in Russia there were just over 3 million people of this age category.
The regulator has not provided more recent data, promising to publish the final statistics for 2024 only in spring. But the information that is already available, in my opinion, is enough for reflection. With the tightening of the policy on lending to people with a high debt burden ratio (DLR), banks are targeting an audience that is not yet burdened with obligations.
In fact, teenagers who are still in their senior year of high school or have just graduated from high school are being granted the status of an adult. And with it, the ability to borrow. Earlier, before the strengthening of regulation, banks were practically not interested in them. It is understandable: who needs a borrower who, as a rule, has no income of his own, and even on the contrary, is a very expendable part of the family budget (education, fashionable clothes, games, cafes, etc.)?
Everything is different now. Credited older generation has shifted the interest of banks in the direction of young citizens who do not yet have an IEP for obvious reasons. And last year was a turning point in this sense. Despite the fact that there has not been any movement in the incomes of young citizens, banks are giving them credit cards in the truest sense of the word right and left: they are waiting for them at universities and subway stations.
Shopping malls have become the most favorite hunting ground for young borrowers. Apparently, this is a kind of modern scoring (system of borrower assessment): if a teenager spends time in shopping centers, there is money in the family. By the way, a big mistake. After all, shopping centers for today's youth are the entryways in the old days. Warmth, free wifi and cafes with fast food. The choice of such a place to hang out in no way indicates solvency.
Immature minds are happy to sort out credit cards, spend money from them in the same cafes, buy things. And when the moment of repayment comes, they fall into a stupor, but they do not admit it to their parents, fearing a fatherly repayment. As a result - delinquency, which grows into fines. When the free financial life is revealed, the amount owed is often quite substantial.
Suddenly, information about the consequences of giving credit cards to young people came from VTB Bank, which decided to analyze how the representatives of different generations pay their debts. And here is what he observes in the section "zoomers": their share in the portfolio of total delinquency of the bank is growing - last year it increased from 3% to 7%. More than twice as much! "This trend is due to the fact that young people are starting to take loans and use credit cards - they are increasingly taking two or more loans from different banks. In addition, zoomers take the longest time to close their overdue debts on unsecured loans - up to 20 days," the bank explained.
How to spoil the credit history by spending Br2.2 thousand.
It is interesting that this bank itself adheres to the policy of giving out credit cards. For example, I was told about the situation with 18-year-old freshman Marina (name changed) by her mother. Last fall, the girl had no debts and credit history. But on the street she got VTB and MTS-Bank cards. No one explained the terms to her, though, or emphasized that it was borrowed money. After all, she could have simply mixed up the cards she used to pay for her simple purchases.
Moreover, she spent 1100 rubles on VTB credit card and 1074 rubles on MTS-Bank. And somehow she was not concerned about the fact that these debts had to be paid back. Whether she received notices from the banks, her mother does not know. The parent found out that her daughter had defaulted on her payments from notices from debt collectors. Naturally, the process of inquiry began immediately. All of her daughter's debts were listed on her credit report, with a red warning that they were 61 to 90 days past due.
The mother rushed to repay the debt, which totaled about 8.8 thousand rubles, of which 6608 - penalties for delinquency in MTS-Bank. It would seem that this is not such a large sum. But let's look at the consequences. The girl's individual credit rating, it follows from the BCI report, is now 355 on the scale of the United Credit Bureau. This is the lowest category, which effectively closes the borrower's access to credit for many years. What if, after reaching a certain age and getting a job, she wants to take out a mortgage? They won't. Isn't it too big a payback for 2.2 thousand rubles spent on ice cream, chocolate bars and coffee from a credit card?
What did VTB and MTS Bank say?
VTB issues credit cards from the age of 18, which is enshrined in Article 26 of the Civil Code of the Russian Federation. To do this, you need to be a citizen of the Russian Federation, have permanent registration and official income from 5 thousand rubles per month. For a limit of more than 300 thousand rubles will require 2-NDFL. The share of credit cards issued to bank customers aged 18-19years last year does not exceed 2%. Active use of credit cards begins at the age of 21.
MTS Bank, when making a decision on issuing a credit card, including through partner channels, always requests information about the client's credit history from the BCI. Also the client necessarily indicates his/her income when filling in the credit application, which is taken into account when setting the card limit. At the same time, credit limits for young people who have not entered the labor market are limited to a small amount, which, if they comply with payment discipline, allows them to minimize credit risks.
What do attempts to refinance credit card debt lead to?
- I've seen the statements. My son did not make any expensive credit card purchases - cola, shawarma and so on. Everything for 200-300 rubles, - shared the story of credit adventures of student Igor (name changed) his mother.
The boy, it must be said, was lucky - he entered on a budget. When applying for a debit card to receive the required payments in Sber (its representatives did not respond to Izvestia's request), they strongly recommended him to open a credit card with a limit of 10 thousand rubles, but very quickly increased it to (hold your breath) 150 thousand rubles. Not even all working citizens with a good income are approved for such a line, and here he is a student with a measly stipend.
When the bank sent a notice of the minimum payment, the guy thought that this was his entire debt. As time went on, the obligations grew. Having realized the real size of the problem, the student did not lose heart, but turned on the "wits". He tried to refinance the debt in another bank, which gives a kind of loans until salary to debit card holders, and even if there is no money on the account at all. And again he did not take into account that this is a very short debt - the interest-free period is only seven days, and then high interest rates, typical for microloans, start to accrue. This obligation, in turn, I tried to repay by transfer from Sber's credit card, from which the debt began to swell due to commissions. As a result, the total debt grew to 100 thousand.
As in the first case, the guy said nothing to his parents. And again, the mother found out about everything by accident, when she received a call from the second bank, where the parent was listed as a contact person. The student owed 23 thousand on microloans. The story lasted a year, the main debt arose precisely because of fines and commissions. Naturally, the parents found the means to interrupt this history. But the credit history is now ruined for many years.
Can the teenager himself repay the debt to the bank
Perhaps someone will say that teenagers are infantile, it is necessary to teach them independence. This is the third story. Lawyer Sergei, a father of many children, in principle, instilled independence in his children from infancy. We fall down ourselves - we get up ourselves, we learn from our own experience, because no one can learn from someone else's. The bank also called and said that he owed 12,000 rubles on his credit card. The man does not borrow from banks as a matter of principle. It turned out that his daughter, 18 years old, indicated him in the application as a contact person.
- Since she was 16, she has been trying to work and live independently. Since adulthood, our support has been minimal. Many times she was told, persuaded that loans cannot be taken until she has a stable job. We saw that bank representatives were coming to draw up the documents, but we did not interfere, because the girl is of age and should give an account of her actions and learn from her own experience," said Sergei.
The parents did not close the daughter's debt. She got out on her own by borrowing from friends, but the repayment terms were violated and her credit history was ruined.
There are thousands and thousands of such examples. This is practically an already formed trend.
Why young citizens will be denied mortgages
What do banks count on when they issue loans to adult teenagers who have not yet entered the age of awareness, do not know how to manage finances, and their needs exceed their capabilities? In my opinion, solely on the fact that their parents will cover their debts for them. Many of them are no longer suitable for the role of borrowers due to high PDN (mortgages, consumer loans). But it is possible to circumvent the Central Bank's regulation by lending money to their children. Can we blame the parents for not teaching them? Perhaps, yes. But we all realize that in a certain age of youth rebellion teenagers do not listen too much to what they are told by their "ancestors". And in this situation, no less, if not more, responsibility lies with the banks, which are a strong point.
The answers I have been getting from the Central Bank are indicative. In the fall, when I asked whether such a mass distribution of credit cards to young people aged 18-19 was not alarming, the Central Bank replied that it was a good opportunity for young citizens to gain financial experience and credit history. Now they have also impressed with the answer - "to limit the issuance of the most risky loans, the Bank of Russia uses macroprudential limits, which directly limit the granting of loans to borrowers of all age categories of citizens with a high debt load". Excuse me, but what is the debt load (how much income is spent on servicing obligations) of 18 year olds who have neither load nor income?
As is customary to say, memorize this post. I have no doubt that in two years, when parental outrage reaches a boiling point, this story will reach the president. He will instruct the issue to be resolved. At that time, I think, the Central Bank will make a fuss. But isn't it better to prevent the problem from spreading, rather than heroically solve it later?
And yes, it also makes sense for banks to think about it. After all, now they are really laying themselves a demographic credit hole for the future, when a whole generation may not be good enough to lend to.
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