Credit card applications by young Kiwis down 26% as Gen Y avoids debt

Credit card applications by young Kiwis down 26% as Gen Y avoids debt
Credit applications made by New Zealanders born between 1981 and 1994, otherwise known as Generation Y, fell in May by more than older age groups, figures from credit information provider Veda Advantage show. Credit card inquires made by Generation Y fell 26% in May from a year ago, compared to an overall average fall of 22% for Generation Y, Gen X (born between 1965-1980, and Baby Boomers (1946-1963) together. Mortgage applications from Gen Y also fell 5% in May, compared to an overall rise of 3% and a rise of 7% in the Baby Boomer category from a year ago. Hire purchase inquires by Gen Y were down 40%, compared to an overall fall of 27%. Personal loan inquiries made by the younger age group were also down 40%, compared to an overall decrease of 20%. "A year ago our research was showing that, while applications for personal loans and hire purchases had dropped, credit card applications had remained steady, driven in part by an increase in usage amongst Gen-Y," Veda Advantage NZ Managing Director John Roberts said. "Whilst in the past this generation had become accustomed to taking on debt as a result of student loans, the indications are that they are now becoming more cautious about increasing their indebtedness," Roberts said. "Another sign of this new Gen-Y debt conservatism can be found in the reduction of reported defaults. Total reported defaults for May were up slightly by 0.6% compared to the same month last year. While Gen-Y reported defaults were down 9.4%, baby boomers by contrast reported an increase of 2.01%," he said.

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