There used to be a time when the prospect of debt filled people with dread.
Those days may be gone, it seems. A report has found that young credit card holders in the US in their late twenties and early thirties get into more debt with their credit card than their parents did at the same age. They repay debts more slowly and even run the risk of dying in debt.
Perhaps this isn’t surprising if you consider these statistics about credit cards in the US:
- There are approximately 181 million credit card holders
- There are roughly 609.8 million credit cards
- Whereas one third of Americans don’t hold a credit card, 1 in 10 consumers has more than 10
- The annual purchase volume is $2.1 trillion.
The report compared people of similar age groups, income, and marital status, and found the payoff rate on debt was 24 percentage points lower than that of their parents. At 77 percentage points lower, the gap was even bigger when compared with their grandparents.
One of the reasons for this is that credit card debt carries less of a stigma now. As a result, young people are less reluctant than the earlier generations about going into debt with their flexible friends.
Is this the same in other parts of the world?
Well, the UAE is displaying a mixed attitude towards credit cards. Debt was a crime there until recently. People who wrote bouncing checks could face fines and a spell in jail.
A survey has revealed that 45% of credit card holders in the UAE avoided paying for goods and services online. Traditionally, the UAE has long been more of a cash society, with many people paying in cash for goods on delivery or, for larger expenses, by check. One logistics company reported that 81% of its customers prefer to the use cash-on-delivery mode of payment.
That’s not to say UAE consumers are rejecting credit cards completely. Not by a long shot. In a different survey, 65% of the people asked stated that they’d rather pay by credit card or other electronic means. Significantly, it wasn’t just young people who said this. 74% of the participants aged 50 or over said that they preferred paying by card or by transfer.
What has generated this change in the UAE’s attitude towards credit cards?
It seems that the UAE’s large expat population is making its influence felt. The wealthy, older generation of expats is in the habit of paying by credit card and doing their personal banking online back home. They then come to the UAE starting as they mean to go on in this respect.
Attitudes towards credit cards and the debts they can incur are changing, both in the UAE and the US. Credit card debt is considered less of a bad thing these days, so young people are more willing to entertain the prospect. In the meantime, the UAE authorities have become slightly more compassionate towards people in debt, which may encourage greater use of credit cards by consumers.
But even though times are changing, when it comes to paying for things, many expats in the UAE remain set in their ways: they’ve paid by credit card all their life and aren’t about to stop now.