Barbadians turn to short-term credit for holiday spending

Barbadians are increasingly turning to short-term loans to finance their holiday celebrations, with one leading microlender reporting a 17 per cent surge in demand compared to last year, highlighting the financial pressures many face during the festive season amidst rising costs and economic uncertainties.

CEO of Axcel Finance, Samuel Rosenberg told Barbados TODAY: “There has been a substantial increase in the demand for our Xpress Loan product which offers short-term financing. We have seen an increase of over 17 per cent in the demand compared to the same period last year.

“The majority of the demand relates to holiday shopping and travel.”

In light of economic factors such as inflation and rising interest rates, Rosenberg noted that the company emphasises responsible lending practices to protect its customers from overextending their finances.

“While the customers tend to request higher loan amounts, Axcel Finance, as a responsible lender, reviews the personal financial position of each client to ensure they are not over-extending themselves,” he said. “We carefully assess the individual household budget and ensure the loan amount and repayment terms are well suited for the client.”

Short-term lenders fill a niche for quick cash needs with simplified application procedures but are often criticised for potentially predatory practices and high interest rates to borrowers.

Axcel Finance was encouraging borrowers to be cautious with their spending, Rosenberg declared.

“We all know that January always comes after December,” the CEO noted, further stressing the importance of financial prudence during the festive season.

Rosenberg acknowledged the reality of societal pressures to spend but emphasised individual financial responsibility.

“Societal pressures are not unique to Barbados. People put different values on different things, and as long as they can financially afford it, we must respect it,” he said. “As the economic environment and employment stability improves, it enhances consumer confidence to spend more. Ultimately, every dollar that is spent in the economy has a compounding effect on economic activity.”