Consumers borrow easily but not more
In 2004 consumers borrowed 10.4 billion euro to buy durable consumer goods like cars, computers or sofas. The amount is the same as in 2003.
Consumers opt for easy loans
Consumers borrowed as much in 2004 as they did in previous years. However, the way they borrowed money changed. Consumers often opt for the easy types of credit. Consumers took out less non-revolving credit. Borrowing money with credit cards increased substantially. In 2004 some 28 percent of the total amount was provided by credit card credit, versus 13 percent in 1998.
Revolving credit remains the most popular kind of credit, with a 61 percent share of total credit provided in 2004. This percentage has hardly changed over the years. It is a type of credit that allows people to withdraw money up to a certain limit.
Credit by type of credit
Borrowing from banks and credit card companies
The increasing popularity of credit card credit raises the market share of banks and credit card companies in providing credit. Their share in revolving credit is also growing.
In 2004 banks and credit card companies had a 65 percent share in the total provision of credit to consumers. In 1998 this was 54 percent. Financiers only have a 30 percent share left versus 40 percent in 1998, while mail order companies provided 4 percent of the loans (4 percent), and municipal credit banks 1 percent (2 percent).
Credit by credit provider
Mail order credit is the most expensive
The amount credit providers charge consists the interest and costs. The amount is charged each month and recalculated into an effective credit charge on an annual basis. This percentage depends on the interest rate in the money market, the amount and the period. Competition also pays a role in this.
Credit providers are not allowed to charge what they want. There is a maximum percentage. In 2004 this was 21 percent.
Mail order companies traditionally charge the most: 19 percent in 2004. The rates charged by the mail order companies are close to the maximum percentage allowed and follow any adjustments of the maximum. The charge for credit card credit averaged 14 percent in 2004. The effective credit charge in revolving credit from banks averaged 8 percent in 2004, over a percent point less that what financial companies charged.
Charges for credit card and revolving credit per provider
Elma van Agtmaal-Wobma