Who pays? Analysis of the cost of consumer credit in Belgium

Consumer credit accounts for only a small proportion of total household debt, but its role can be decisive when it comes to meeting certain expenses, particularly by easing budgetary constraints for some families. Yet, this type of credit can lead to excessive debt for the most vulnerable, a situation that may be further exacerbated by excessively high borrowing costs. To alleviate the risk of over-indebtedness, consumer credit regulations in Belgium, as elsewhere in Europe, provide for limits on the cost to borrower households.

Which sort of credit is subject to higher costs? What categories of households are more exposed to elevated interest rates? How would financial stability and supply of credit be affected by lower maximum rates? Across all these dimensions, this article presents an overview of current regulations and rates on consumer credit.