Younger Kiwis wary of new debt

Credit card inquiries from younger New Zealanders were down 26pc in May.

Younger New Zealanders are increasingly wary of taking on more debt, says the country's largest credit reporting company Veda Advantage.

Looking at credit applications, which include hire purchase, credit cards, personal loans and mortgages, Veda says the youngest group - those aged 15 - 28, had the biggest drop.

While total hire purchase inquiries for May were down 27 per cent from the same month last year, the youngest age group - so-called "Generation Y" reported the biggest fall at 40 per cent.

The group, says Veda, has "previously shown little reluctance in taking on debt."

Veda Advantage's New Zealand managing director John Roberts said that credit card inquiries from "Gen-Y" also fell markedly, down 26 per cent over the same period - more than the 22 per cent fall seen across all age groups.

Their appetite for personal loans was also down 40 per cent, compared with a 19.5 per cent fall from the others.

"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," said Roberts.

"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."

Total reported credit defaults for May were up slightly by 0.6 per cent compared to the same month last year. Gen-Y reported defaults were down 9.4 per cent, but those from baby boomers - those aged 45-63, were up 2 per cent.

NZ HERALD STAFF