Over-indebtedness has increased slightly
After years of declines in over-indebtedness among citizens, the tide has turned according to data from the credit agency Creditreform. The company announced on Wednesday that 5.65 million people in Germany were over-indebted this year. Compared to the previous year, this is a drop of 233,000 people. However, this is due to a statistical effect. If this is factored out and the figure is calculated using the same method as in 2022, the result is an increase of 17,000. There has been a "hidden trend reversal", it said. Over-indebtedness is likely to increase more significantly in the coming year. The last time there was an increase in over-indebtedness was in 2018.
Creditreform explained the development with the higher cost of living, increased interest rates and the weak economy, including higher unemployment. People are considered over-indebted if they are unable to meet their financial obligations in the long term. In coronavirus times, over-indebtedness had fallen as interest rates were very low and people were sometimes more frugal and had fewer opportunities to spend money. In addition, state aid supported companies and thus secured jobs. For its "Debtor Atlas", Creditreform evaluates anonymized data from official registers, online retailers and other sources.
The rise in over-indebtedness among consumers could put pressure on banks, as more individuals struggle to meet their financial obligations. This increasing trend in over-indebtedness may be influenced by factors such as higher living costs, increased interest rates, and a weak economy leading to higher unemployment.
Source: www.dpa.com
