The financial condition of Czech citizens is deteriorating, with a quarter of them facing dire economic challenges affecting their ability to support their households.
Despite this, Czechs exhibit unwavering financial self-assurance, holding their understanding of financial matters in high regard.
Increasingly, Czech individuals are grappling with strenuous financial predicaments. The proportion of those encountering financial distress has risen by more than six percentage points year-over-year. In the previous year, 54 percent of individuals experienced financial discomfort, a figure that has now surged to nearly 60 percent.
This data stems from an international survey conducted by Kantar on behalf of the International Personal Finance group, involving 500 respondents aged between 18 and 75.
The surge is particularly evident in situations involving insufficient funds to manage household expenses, income shortfalls, or loan denials.
A quarter of Czechs have encountered the struggle of insufficient funds for running their households at least once. This is a significant jump from last year’s one-fifth figure. Individuals aged 35 to 44 face such scenarios the most, with the proportion rising from 20 percent to 34 percent within a year.
Moreover, the percentage of individuals who report being turned down for loans by banks (up 30 percent) or other lenders (up 85 percent) has also risen compared to the previous year. Notably, instances of unemployment lasting over a year were mentioned by 16 percent of respondents, marking an increase of nearly a quarter from the previous year.
Lubomír Brůha, Provident’s Director of Credit Risk, remarks that there is a rising trend in loan applications. Nonetheless, the economic challenges posed by the repayment of multiple obligations, especially during challenging times, can lead to increased financial risk. As a result, loan applicants’ repayment capabilities are thoroughly scrutinized to prevent undue exposure to risk.
Jiří Hluchý, founder of fintech Frenkee, echoes this observation by highlighting the mounting consolidation applications, often stemming from excessive debts acquired for indulgent purposes like luxury holidays or non-essential consumer goods.
Czechs who find themselves entangled in the debt spiral frequently turn to family for aid, followed by more distant relatives and friends. However, a reduced number are seeking assistance from the state.
Despite the growing financial difficulties, Czechs remain confident in their financial knowledge and literacy. This confidence has surged over the last three years, with almost 62 percent feeling confident in their financial acumen. Nonetheless, the correlation between self-assurance and actual financial knowledge is not always strong.
This prevailing situation underlines the need for improved financial literacy education to prevent unnecessary borrowing and high-interest financial pitfalls.