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Why do Taiwan’s young adults struggle with credit card debt?

Reporter Vivian Hsiao
Release time:2023/05/08 17:07
Last update time:2023/05/08 17:07
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TAIPEI (TVBS News) —  In today's economy, many young adults face the challenges of low wages and increasing inflation and interest rates. 

Combined with the "you only live once" (YOLO) mentality, these factors have led many to adopt a spend-now-think-later approach to their finances.

 

According to reports from international financial corporations, the last quarter of 2022 shows that millennials' average credit card debt increased by almost 30% compared to the same period in 2021.

Meanwhile, Gen-Zers experienced an even steeper surge in credit card debt, with an average increase of 40%.

This indicates that the younger generation accumulates debt faster than their older counterparts.
 

Marketing executives explain that social media plays a significant role in this behavior. Young people eventually believe they are missing out if they don't keep up with their peers' purchases. 

The convenience of e-payments has also made it easier for them to indulge in a "swipe first, think later" mentality.

However, financial avoidance can set in, and many may ignore their mounting debts to avoid emotional distress. 

The dean of the Dayeh University College of Management, Wang Chih-chien, remarked, "many young people adopt a short-sighted approach to their finances, prioritizing immediate gratification over long-term planning."

He explains that a tendency to spend whatever money they have leads to them relying on credit cards and loans to cover expenses they cannot afford.

"While credit cards may seem like a convenient solution, pushing the problem back doesn't mean it's resolved," Wang added.

Financial experts warn that while credit cards allow for delayed payment, the high-interest rates can result in paying more than the original purchase price.
 

Experts suggest introducing a spending cap on recreational purchases and using more cash payment methods to monitor expenses better. 

Without such limits, daily indulgences could lead to significant debts in the future.

Taiwan Business

#Taiwan#credit card debt#young adults#financial avoidance#business

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