Digital financial literacy for socioeconomic inclusion and equity

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The rise of digital small instant loans: Examining the impact on young adults in Europe

Case study based on story from media resources

Developed by the Kauno rajono švietimo centras (Lithuania)


In recent years, the rise of digital financial services has significantly altered the landscape of personal finance. Digitalisation has made credit more accessible, especially to young people. Small instant loans and other consumer credit services have increased notably in the past few years and have become popular among young adults across Europe because of quick approval processes, minimal documentation requirements, and short repayment terms. However, this increased accessibility also raises concerns about financial literacy and the ability of young borrowers to manage their finances effectively. Data sources point at young age and low levels of education as factors for the higher existence of debt problems.

Case analysis

This case study aims to explore the use of digital small instant loans among young adults in Europe. By analyzing various data sources, including surveys, financial reports, and interviews, this study provides an understanding of young consumers’ financial situation and their perceptions of the challenges they face. Several public authorities indicated that speed and convenience has made access to credit more attractive for young adults. ( OECD (2020), Advancing the Digital Financial Inclusion of Youth, ( This is often combined with the fact that young people are known to take financial risks. Digital consumer credit is used by young people regardless of their income levels or job status. However, there is a clear connection between specific phases of life (such as young or single parents) or job conditions (including unstable or low-paying positions) and the tendency to take out digital instant loans and consumer credit. Young people, who are still learning to become independent housekeepers, seem to end up in debt due to impulsive consumption, together with a low income, poor financial skills, poor self-control, and life-changing circumstances. Young people living in low income communities, with limited experience and lower education levels can be identified as vulnerable consumers who are not aware of the problem of over-indebtedness (

The young people who take an instant loan once are likely to do it again. Typical purposes of use include purchasing of new models of smartphones, computers or other electronic gadgets, weekend travel or vacations in distant foreign countries, buying alcohol, cigarettes and partying. However, it is also common to buy food and to repay credit or interest among low-income consumers. Frequency of borrowing by young adults likewise increases due to peer influences through popular social media. (
Yet digital small instant loans pose potential risks. Young adults tend to have more unsecured debt, for example, due to overspending. The process of obtaining digital small loans is quick and convenient, but one disadvantage is the high interest rates compared to traditional bank loans and they must be paid back in a short period of time, when compared to long-term loans, such as student loans or mortgages There is considerable evidence that low-income consumers with no assets who need to improve their financial situation have fewer options and may be forced to accept high-cost credit.
The examples highlight that, depending on country contexts and other factors, diverse solutions may be implemented to support the digital financial inclusion of youth. The popularity of online loans among young people has stressed the importance of consumer education because young people lack sufficient budgeting skills in financial independence and management ( .

On the basis of this case study, it is undeniable that young people’s consumer education and consumer protection need to be strengthened. In Lithuania, this need has already been recognized in both consumer policy and teacher education.

Proposed solutions and recommendations

Lithuania has implemented a measure to combat irresponsible quick loan borrowing through the initiative “Stop Consumer Credits”. This measure allows individuals who struggle with excessive borrowing to opt-out of receiving consumer loans. Additionally, it serves as a preventive tool to ensure that no one else takes out loans in their name. Once an individual registers on a monitored list, credit providers will no longer grant them loans. Persons shall be added to and removed from the list at the request of the individual or by a court decision. This measure helps to prevent impulsive decisions that could have long-term consequences. “Stop Consumer Credit is not just for those in trouble because of uncontrolled borrowing. People can also sign up to the list for security reasons, for example to prevent others from taking out consumer credit in their name if they lose their ID.


Agnė’s Journey to Financial Freedom: A Success Story

At the age of thirty, Agnė (name changed for privacy) found herself facing a critical point. Employed in a government institution in the capital, her monthly income barely exceeded 1200 Euros. Despite this modest salary, Agnė aspired to establish a fulfilling life with her new partner. They leased an apartment in one of the city’s recently developed districts, engaged in frequent travel, enjoyed seaside vacations, and dined out regularly. For a brief period, life appeared idyllic, yet Agnė’s financial situation was deteriorating. Over the course of four years, she acquired six consumer loans to sustain their lifestyle, accumulating a total debt of 30,000 Euros, inclusive of interest. The burden of debt became overwhelming, prompting Agnė to seek assistance.

This led her to discover the Lithuanian Bank’s “Stop Consumer Loans” program. Determined to regain financial control, Agnė enrolled in the initiative, which provided personalized financial counseling, debt restructuring options, and educational resources to foster sustainable financial practices. Guided by the program, Agnė crafted a comprehensive budget and payment plan. She learned to differentiate between necessities and luxuries, prioritize essential expenses. The counseling sessions also offered emotional support, helping her to maintain motivation and focus on her path to financial recovery. Gradually, Agnė began to witness progress. Debt restructuring options offered by the program reduced her monthly payments. After two years Agnė successfully paid off her loans. This experience changed her perspective on finances. Presently, Agnė continues to apply the financial management principles she acquired, while still embracing life’s pleasures. Agnė’s journey highlights the power of determination and the effectiveness of supportive financial programs. Through the Lithuanian Bank’s program, she not only conquered her debt but also acquired the skills and confidence to secure a stable financial future (

Self-reflection questions

These questions can serve as prompts for introspection and self-assessment, helping individuals gain insight into their financial habits, values, and aspirations.

  • Are you tempted to spend or borrow money to keep up with my peers?
  • What factors influence your decision to take out a loan?
  • What is your understanding of interest rates and repayment terms?
  • Do you have a clear plan for repaying your debts?

Self-assessment questions

Read each of the 5 questions carefully and select the best answer from the options provided.

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