“Debtor Atlas 2024”
“Fear-saving” is putting pressure on over-indebtedness in Germany
According to Creditreform, the number of over-indebted people has fallen slightly. However, experts cannot identify a positive trend. The numbers are expected to rise in 2025.
It’s actually good news: debt in Germany is declining slightly. However, according to experts, this has a serious background. “German consumers are unsettled and afraid of the future. That’s why they’re holding on to their money,” says the head of Creditreform economic research, Patrik-Ludwig Hantzsch. He even speaks of “fear-saving.”
The number of over-indebted people in Germany fell by 94,000 to 5.56 million this year, as the credit agency Creditreform announced. This is the lowest value since the evaluations began in 2004, according to the new “Debtor Atlas Germany 2024”. The over-indebtedness rate, i.e. the proportion of over-indebted people in relation to all adults, fell from 8.15 to 8.09 percent. Anyone who cannot meet their financial obligations in the long term is considered over-indebted.
The sharp increase predicted by experts last year for 2024 did not materialize. Purchases are often postponed, says Hantzsch. The pronounced tendency to save means that cases of over-indebtedness are reduced. The reasons for this are the persistently difficult economic situation, the policies of the federal government, the war in Ukraine and the elections in the USA.
Increase expected for 2025
According to the HDE consumer barometer and the consumer climate index from the Nuremberg research institutes GfK and NIM, the mood in Germany has recently improved somewhat, but is still poor. People are reluctant to shop and save more. According to the Federal Statistical Office, they saved around 11 percent of their disposable income in the first half of 2024. There is currently little to suggest a change in mood. According to a survey by management consultancy EY, only one in four expects their financial situation to improve in the coming year.
Looking ahead to 2025, Hantzsch expects that the over-indebtedness situation in Germany could worsen. “Many consumers have used up their savings and are holding on to their money partly out of fear. This leads to financial overload at some point, especially for people with low incomes,” he says.
Creditreform evaluates anonymized data from official registers, online retailers and other sources. The methodology for calculating over-indebtedness was changed last year. The number 5.56 million is therefore not comparable to the data before 2023. According to Creditreform, over-indebtedness in Germany has decreased in recent years.
Unemployment is no longer the main trigger for over-indebtedness
The Federal Working Group for Debt Advice still sees no reason to give the all-clear. “The number of people affected is still significantly too high. We cannot meet the demand,” says managing director Ines Moers. The debt counseling services are plagued by personnel problems. Many consulting positions are unfilled, said Moers. Many municipalities and federal states made less and less money available for offers to help affected people.
According to Creditreform, the situation remains particularly difficult for individual groups. Low-income earners in particular are affected by high energy and food prices. According to the study, single women are also affected disproportionately often. Nevertheless, men are generally more likely to be over-indebted. The highest over-indebtedness rates in Germany in 2024 were in Bremerhaven, Pirmasens, Gelsenkirchen, Herne and Neumünster.
What leads to over-indebtedness? As of this year, unemployment is no longer the most common trigger. Most cases of excessive indebtedness were caused by illness, addiction or accident. This accounted for more than 18 percent. Experts justify the fact that unemployment is no longer the main cause with the stable employment situation and demographic developments. However, Hantzsch predicts: “For the current and coming year, the loss of jobs will again become the focus of attention.”
“Buy now, pay later” offers are controversial
When it comes to how people get over-indebted, installment loans play a big role. This also includes so-called “Buy now, pay later” offers, where the bill only has to be paid later. This is increasingly in demand, as data from Schufa shows. According to this, almost every second new installment loan taken out is now a small loan of less than 1,000 euros. Creditreform sees this as a reason for the renewed increase in cases of over-indebtedness among younger people.
Consumer advocates also warn against the offers. This can tempt you to order more than you can actually afford. “Interest can also ensure that you pay significantly more for an item than if you paid immediately,” writes the North Rhine-Westphalia consumer advice center and advises when it comes to “Buy now, pay later”: “Use the function (…) on best only in exceptional cases.”
An EU consumer credit directive that came into force in October 2023 and must be implemented into national law by the end of 2025 is intended to remedy the situation. This also requires an audit when granting smaller loans. In the future, when you borrow money from the bank, you should also be informed more clearly about how much it costs.
dpa
Source: Stern
