Question

Do you think it is right that lenders aggressively market credit lines to certain types of consumers? (e.g. college students on their campuses, retirees on fixed incomes, people who have recently filed bankruptcy, people who might not understand the credit terms due to limitations of language, education and/or health?)

How have changes in expectations, attitudes and practices on the part of lenders and consumers changed over the last two generations?

Answer 1

Ans.

Yes it is true that that lenders aggressively market credit lines to certain types of consumers (e.g. college students on their campuses, retirees on fixed incomes, people who have recently filed bankruptcy, people who might not understand the credit terms due to limitations of language, education and/or health) the reasons being these section of the society are vulnerable and lack complete understanding of the complex financial system, may not have access to formal banking channels, or may have limited availability, also this section in gereal pays high interest to lender so they can earn higher margins and they already price the risk of high defaults in their lending . US Subprime mortgage is example of that.

Over the last 2 generations Generation Z (18/22 years) and Generation Y (23/38) or X(39 / 54) it is observed by many studies that new generation is very high on debt drive by the easy availability thorugh fintech and other banking channels through technology means. Also the old generations are trying to reduce the debt as their earning power increase and they are more mature in understanding the impact of high debt and more stable in their careers.