Fewer loans, higher overdraft
The Dutch population borrowed less in the form of consumer credit in 2005 than in 2004. Moreover, they paid back more of their debts. As a result, the outstanding debt on consumer credit fell for the first time in twenty years. On the other hand, the total overdraft on current accounts was substantially higher in 2005, according to figures from Statistics Netherlands.
Consumers borrow less
Consumers borrowed a total 10.1 billion euro to purchase items such as cars, furniture and consumer electronics in 2005. This is 5 percent down on 2004.
They repaid 12.3 billion euro in debt and interest on consumer loans, 8 percent more than in the previous year.
Hefty increase in overdrafts
The total overdraft on current accounts rose again in 2005. At the end of December 2005 nearly 3 million current accounts were overdrawn for a total amount of 7.5 billion euro. This is 9 percent more than at the end of 2004.
However, as the number of accounts overdrawn hardly changed, the net overdraft per account was higher: it rose from 2.4 thousand euro in 2004 to 2.6 thousand euro in 2005.
More and more credit card debt
While total consumer credit decreased in 2005, consumers did use credit cards more. The amount of new credit granted on credit cards was 3.1 billion euro, 5 percent more than in 2004.
Last year credit card credit accounted for 30 percent of the total amount of credit. This share is increasing every year. Most money is still borrowed in the form of revolving credit, however. In 2005 this accounted for 59 percent of total credit.
Outstanding debt down for the first time in twenty years
The increase in consumer credit has slowed down since 2001. This coincided with changes in the tax system in 2001, which made interest on loans for consumption purposes non-deductible. Also, instead of taking out private loans, consumers now overdraw their current accounts or take out cheaper mortgages to create more financial leeway.
At the end of 2005 the total outstanding debt on consumer credit was 17.5 billion euro. This is just over 3 percent less than at the end of 2004. The decrease in the result of lower amounts of credit granted in combination with higher repayments.
It is the first time since 1985 that the outstanding debt on consumer credit fell on an annual basis. In the period 2001-2004 the outstanding debt fell by an average 4 percent per year. From 1997 to 2000 this was still 9 percent per year.