Norway Needs to Combat with Increasing Luxury Traps

Debt collection agency Lindorff reports that almost every fourth person registered with the default action is under 25 years old, and the number of debtors in this age group has risen by 50 percent since 2005. There has also been a record increase in the number of debt schemes in this year despite the economic growth in Norway.

This creates concern and The Children, Equality and Inclusion Ministry (BLD) has examined the reasons dragging young people into this financial trap.

– Young adults are tempted with a consumer culture where the urge to buy is partly detached from the actual ability to pay. This “buy now- pay later” culture is encouraged in many advertisements, and has become a sort of motto, said Minister Audun Lysbakken.

Consumer Ombudsman Gry Nergård also points out the aggressive marketing to which youth and young adults are exposed through all marketing channels – both traditional media, and now by SMS, Facebook and blogs.

-The main message of these ads is: “You need this product, you deserve it, you get extra benefits right now – and you do not pay now,” said Nergård.

The Ombudsman pointed out the need for consumer education so that young adults are brought to understand the consequences of such a purchase on credit or to take up credit or consumer loans.

Likewise, the joint project where both FO (Consumer Ombudsman) and SIFO (National Institute for Consumer Research) are engaged, reveals similar patterns. Young adults have a high consumption desire. Almost all participants of the research project had friends and acquaintances who have now or have had credit problems in the past. They did not have an overview of the economy and, because they were compulsive or optimistic, took too much credit. According to the study, the main reason for this problem is more rooted in external factors such as being tempted by a complicated economic system, or by misleading marketing in addition to lack of economic education.

The response from the project, on the other hand, points out that many respondents believe credit to be tempting and dangerous. A consistent finding is that understanding of credit and loans is very weak among young adults. In addition, some misleading advertising and sales lead them to get in situations where they do not understand the consequences. Therefore, the researchers believe that school would be a suitable place to educate students more about this.

Norway's Safety Makes Them Careless

Another striking finding in the research project is people's faith in Norway's prosperity and security. Young adults who were interviewed repeat that they have great faith in the government and their parents if they are to get into a personal economic crisis.

– Norway appears to be a safe and good country. The security makes young adults careless, and they are tempted to take credit. The impression is that Norway will arrange everything for them, no matter how hopeless the situation may seem, said researcher Ragnhild Brusdal.

Facts about Personal Debt Defaults

● Twelve-month growth in total gross debt was 8.6 per cent until the end of August.

● Total gross debt amounted to 4,741 billion in the end of August, up from 4,728 billion in the end of July.

● Nearly 87 percent of total gross debt came from mainland Norway in August. This is equivalent to 4,106 billion and an increase from the previous month, when it was 4,096 billion.

● Non-financial companies had a debt growth of 4.1 percent, while household debt increased by 7.2 percent.

● 25% of those registered with the default action in Norway were under 25 years. The increase in payment defaults has been greatest among young adults. It is usually attributed to massive marketing of credit, goods and services or for large loans.

Luksusfellen Reflects Many Young Adults Well

Luksusfellen (Luxury trap) is a consumer-oriented reality program aired on TV 3 based on the Swedish concept Lyxfällan. The Norwegian version premiered in spring 2008 and is one of the channel's most watched programs.

In the program, we meet ordinary people who have found themselves in financial difficulty because they have irresponsible spending habits, and consumers who have borrowed beyond their means. Through counseling and follow-up, the program's financial experts help people out of money pinch and teach them healthier consumer behaviors.

5 Online Pharmacy Options That Can Save Patient’s Money

  • Tags
- Advertisment -

Must Read