Debt Literacy and Its Importance in the Czech Republic
Debt Literacy and Its Importance in the Czech Republic

Author(s): Bohuslava Doláková
Subject(s): Present Times (2010 - today), Socio-Economic Research
Published by: Masarykova univerzita nakladatelství
Keywords: financial literacy; debt literacy; indebtedness; mortgages;
Summary/Abstract: This paper aims to show the importance of one part of financial literacy that causes most problems in the Czech Republic. According to the latest data, there is quite a lot of Czech overindebted – they borrowed too much money, lost jobs, found a very inconvenient loan, etc. Those people were not able to analyze their financial situation in the broad context of having a loan. As we know from the start of last big financial crisis risky loans (e.g., Mortgages) can cause a worldwide problem. In general people with lower levels of debt, literacy tends to transact in high-cost manners, incurring higher fees and using high-cost borrowing. Due to the New Consumer Credit Act from 2016, there was expected a change in the loan amounts and risk. It is too early to judge the impact of that act, but we can see a basic tendency that shows us people are still willing to go in debts. This makes debt literacy still very important as there are many overindebted people in the Czech Republic.

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