Rise in food prices and consumption at half mast, down 4.1% in one year according to INSEE. Inflation weighs on the morale of consumers who tighten their belts or fill their woolen stockings, in particular, with a record level of savings on the Livret A.
In this context, some of the most vulnerable households would resort more to consumer credit to continue consuming. In January, the production of this type of credit increased by 2.2% compared to the previous year to 3.6 billion euros, according to the French Association of Financial Companies (ASF).
A relative increase but with strong disparities. The production of personal loans fell by 17.6% in the period due, in particular, to the slower increase in the usury rate compared to interest rates, which prevents many households from accessing this type of loan. On the other hand, revolving credits, also called rotary (envelope is replenished as funds are used) registered a significant increase in January with a growth of 14.7% in one year. In the first month of 2023, 855 million euros were lent compared to 745 million in January of the previous year.
This increased use of revolving credit reflects the purchasing power difficulties experienced by a certain number of vulnerable households in a context of rising prices.
“Households, tell us,” explains Julien Cailleau, Deputy CEO of Oney (a joint subsidiary of BPCE and Auchan) in le figaro. Many of these loans are obtained in the second half of the month and often for small amounts.”
More credits but smaller sums, this reflects a need to finance daily expenses. A slope that can lead some households to over-indebtedness. These revolving credits generally associated with credit cards come with particularly high rates, especially when it comes to small amounts. In fact, they are higher than 20% for loan amounts of less than 3,000 euros compared to 6% above 6,000 euros.
Decreasing revolving credits regularly
However, on the ASF side, we want to put this rise in revolving credit into perspective. Although the Association has noted a constant increase since the release of the Covid, remember that the level is far from the records reached at the end of the 2000s. For 14 years, the production of this type of loan has registered a constant decrease . and it has even collapsed during the health crisis.
The rebound observed in recent months would therefore constitute a return to normality. And if the total amount exceeds that of the pre-Covid period, it is due to inflation and the fact that a larger sum has to be borrowed to acquire the same amount of goods.
Because the more global trend of consumer credit, which includes, in addition to revolving credit, personal loans, LOAs or credit assigned to a purchase, is downward. In its annual survey, the Household Credit Observatory indicates that in 2022 the proportion of households with this type of credit fell to 21.8%, the lowest level recorded since 1989.
Only revolving credit followed the same trend, falling for the fourth consecutive year. In 2022, 5.6% of households used revolving credit, up from 6.6% again in 2012.
Source: BFM TV
