Recent survey debunks some myths about Costa Ricans indebtedness
Credit cards are not the main component that generates debt for Costa Ricans. In addition, people who receive less Income have few real options for access to credit regulated financial entities. This emerges from the second delivery of the results of the “Debt of Costa Rican households”, carried out by the Office of Financial Consumption (OCF).
The study was carried out in the last months of 2020 and covered a total of 1,200 people aged 18 to 65, with a sampling error of 2.8% and was applied nationwide.
“The survey aims to measure the reality of indebtedness in Costa Rica. In the first installment, we pointed out that people have broad debt; on this occasion, we will break down the behavior of the granaries concerning the type of debts, the attitudes they adopt towards them and the treatment given to the money, ”explained Danilo Montero, general manager of the OCF.
Credit cards aren’t the first
When it comes to the types of debt people in Costa Rica take on, credit cards are not the number one reason for debt. This is supported by two results that the study showed: on the one hand, the type of debt according to the level of income of the population, and on the other hand, in relation to the level of commitment in relation to income. for the payment of said debts.
When asked what types of loans they had, nearly half of those surveyed in the lowest income group (less than 300,000 colones) indicated loans from parents or appliance stores, far away. of the 13% who mentioned credit cards. Even in the next income group (between 300,000 and 500,000 colones), the difference is that personal loans appear as a third type, with one of the three doubling the importance of cards. It is only from the income group of over a million colones that the maps show a greater presence. But, in fact, in the two highest income groups, credit to associations or cooperatives, or housing credit, dominates.
If measured by the level of income commitment to pay debts, it appears that, in the least indebted group, consumer credit, family credit, and credit cards have almost the same importance. At the other extreme, in the most committed group (more than 62% of their income), what dominates is consumer credit, and secondly that of family members. It should be noted that in the second group with the lowest indebtedness (between 18% and 30%), the dominant type of credit is that of appliance stores, almost doubling the importance of cards.
“The survey shows that 7 in 10 Costa Ricans have debt, but it also indicates that it is not precisely in cards as is commonly thought. Despite the number of credit cards in circulation, the survey detailed that 33% of respondents agree to have them, but do not use them. This means that, despite the fact that it can be an important component of debt for some people in particular, other factors have a greater weight in the indebtedness of the population, ”said Montero.
Another relevant finding of the survey is that access to credit through the regulated financial system is not the same for everyone. Indeed, women, people without paid work, who are in the lowest income brackets (less than 500,000 colones) and who live outside the big metropolis, go mainly (between 57% and 63%) to relatives, friends or co-workers.
In contrast, as incomes increase, people credit regulated entities (up to 65%) and credit with family or friends tends to wane. The situation repeats itself according to professional status: when people do not have paid work, the source of credit is family or friends; There is a growing preference for credit from regulated entities (banks, cooperatives or mutuals) for private sector workers and this is the type of source that far dominates for those working in the public sector. For the OCF, this behavior confirms that there is a certain degree of financial exclusion, a situation that deserves a public policy to close this gap. “This poses a challenge to the financial system in general, because some groups do not have access to formal credit, forcing them to seek other more expensive modes of financing, for example limiting their possibilities of access to housing, even affecting their productivity. . The challenge of course is to generate the products and the channels to reach these populations, ”said Montero.
Consumer attitudes towards debt
The Debt Survey also analyzed the behavior of Costa Ricans towards indebtedness, based on their attitudes towards purchases and their attitudes towards the use of credit. The attitudes of debtors towards purchases were measured along four dimensions: for whom the purchases are uncontrollable; those who plan and are ordered; for those who simply consume the basics (minimalist) and for whom consumption generates pleasure (hedonists). AT measure these dimensions, they were offered sentences with which they were asked if they agreed or not.
Significantly, in the group of those who consume for pleasure, the percentage of those who have debt is higher than at the national level, but their average level of income commitment is not that high (37%) . This could be explained by the fact that, according to the survey, the group of public sector workers and people with higher incomes is the one who tends to buy for pleasure and that his condition makes it easier for them to assume responsibility for payments. To understand attitudes towards credit, two dimensions have been proposed: those who behave with prudence and reserve, and those who are more inclined to use credit.
The study identified that men and those with the highest incomes are those who have the greatest tendency to credit. For them, for example, “the use of credit allows them to have a better quality of life”, “it is an essential part of the current way of life”, “it is good to buy and pay later Or “a loan is sometimes a good idea.” A relevant finding is that, in the group of unemployed, 25% are rather cautious about credit, while this percentage drops to 7% in the group of those working in the Public sector The prudent choose to “take care of the money”, “pay off debts as soon as possible” or “try to live with what you have and save”.
Money controls the lives of the highest debtors
The survey “Debt of Costa Rican households” also analyzed the practices of money management by people. For this, a series of sentences were offered to respondents, in which they had to agree or not. This identified four groups: those whose lives are controlled by money; those that are expenditure oriented; those who pay attention to debts; and which are handy with cash.
The most notable data is that, as the respondents agreed that financial situation controls their lives, most of their income is compromised. For example, “it is very difficult for them to meet unforeseen health expenses”, or “they usually do not have money for gifts for birthdays, weddings, holidays”. Low-income groups, private sector workers, and residents outside the GAM, were the most likely to report that money controls their lives.