Youngsters sink into debt trap

Young people are funding expensive lifestyles with credit (RDB)

Young single people living in cities outside German-speaking regions of Switzerland are the most likely group to fall into debt, according to a survey.

The authors of the Swiss Debtor Index, credit management group Intrum Justitia, have called for money management classes in schools as unpaid bills in Switzerland soar to SFr9 billion ($7.23 billion).

The index reveals that the 25-34 age group is three times more likely to get into debt than the average person. In comparison, 65-74 year-olds are 49 per cent less likely to get into financial difficulty.

Youngsters who fall into debt owe more than their older counterparts. The average personal debt of the 0-24 age group is SFr668 while the corresponding figure for 64-74 year-olds is SFr442.

Younger people are more likely to be living off a single income, lead more expensive lifestyles and have yet to adjust to living independently from their parents’ support.

Intrum Justitia’s Swiss branch gives annual prizes to the most financially astute schoolchildren in an initiative called “Swiss School Award – My Money”. And managing director Thomas Hutter told swissinfo that more should be done to educate children from an early age.

“In Finland, schools teach pupils how to deal with money, but less care is spent on this theme in Swiss schools,” he said.

Regional differences

The Swiss Debtor Index measured the amount of money owed in the country by analysing 2.5 million credit checks between businesses and customers, and a further million cases of bad debt. Mortgage repayments and money owed to federal or local authorities was not covered in the survey.

The information was used to build a profile of who owed money and where debt is spread in Switzerland.

People living in cities and towns in the French- and Italian-speaking parts of Switzerland are far more likely to be in the red, the index revealed.

The inhabitants of La Chaux-de-Fonds in canton Neuchâtel fared the worst in the survey, being 64 per cent more likely to owe money than the average Swiss. People in Lugano, canton Ticino, are nearly half as likely to have debts than the national average.

The residents of Schaffhausen, in the German-speaking region, came out as the most careful with their cash and were 45 per cent less indebted than the country as a whole.

Hutter believes the problem of debt in Switzerland is a growing phenomenon.

“Twenty years ago, debt was not an issue in Switzerland, but we are increasingly turning into a credit-driven society,” he told swissinfo.

“In comparison with other European countries, particularly in Scandinavia, Switzerland’s record is not so good.”

swissinfo, Matthew Allen in Zurich

Key facts

The Swiss Debtor Index shows little difference between the debt owed by men (SFr535 on average) and women (SFr492).
Self-employed workers, people with little or no vocational training or those on low incomes are more likely to fall into debt.
Between 1970 and 2000, the Swiss population rose by 16.5% while the number of households grew by more than 50%, signifying an increase in the number of single households.

In brief

In a separate Intrum Justitia survey, called the European Payment Index, Swiss firms have the eighth best credit risk. Switzerland is ranked behind Finland, Sweden, Norway, Denmark, Iceland and Ireland in the league table.

Delays in settling invoices were reduced from 14.8 days after the due date in 2005 to 12.6 days in 2006.

A study by consultancy firm Mercer Oliver Wyman last year calculated that consumer debt has risen to SFr12.5 billion ($10.05 billion) or SFr1,430 ($1,149) per head of population in Switzerland.