Credit Where it’s Due: Changing Attitudes to Debt in the Netherlands

The first universal credit card emerged in the US, from the Diners’ Club, Inc., in 1950. Another, known as a travel and entertainment card, followed from the American Express Company in 1958. In the seven decades since, the concept has taken the financial world by storm. Credit cards have transformed how people consume in all corners of the globe. Well, almost. One small corner of Western Europe is still holding out.

Research by the Dutch Central Bank shows that around 55% of consumers in the Netherlands own a credit card. This is in stark contrast with economies like the US. There, that number is estimated at 79%. But even if they have a credit card, most Dutch people still favor debit cards or cash for payment. In 2020, the Dutch Payments Association estimated 30 million credit card transactions, worth €2 billion, took place here. Small change when compared to 4.9 billion debit card purchases, weighing in at €126 billion.

As an international used to whipping out your credit card in the shops back home, this can be confusing. You may also wonder why you can’t buy so much as a saucijzenbroodje at every Albert Heijn with one here. So why is the Netherlands so resistant to credit cards? And might the attitude toward them finally be on the cusp of changing? Let us you settle into this unique financial culture – and prepare for its future shifts.

Slow Adoption

In 1966, Barclaycard in the UK launched the first credit card outside the US. Credit cards reached very high adoption levels in the US, Canada and the UK during the latter 20th century. Yet, many cultures were more cash-oriented places like Germany, adoption of credit cards was much slower.

The Netherlands was very much part of this club. This, thanks in no small way to a historic determination among its citizens not to spend money they don’t have. But why?

Calvinism and Credit

The Netherlands has long provided a tolerant home to new ideas. In the 16th century, Dutch authorities allowed the printing of books banned elsewhere. This enabled the spread of a particular brand of Protestantism in the country.

Calvinist teaching emphasizes diligence, discipline, and frugality, in all aspects of life. Particularly, in trade. This translated to a culture of cautious consumerism. The Dutch learned to do without for as long as possible, saving to make necessary purchases, rather than using credit to get things.

To any international observing the Dutch today, those traits will sound very familiar. You’ll have noticed how hardworking, frugal and straightforward they can be. Meanwhile, in Dutch, the word schuld translates to both “debt” and “guilt.”

Shifting Perceptions

Through the centuries, this might have helped the Dutch economy a great deal. One theory from Max Weber suggests Calvinism was one of the core factors in the formation of our modern economic system: capitalism.

In this case, taking to Calvinism early meant the Dutch were often innovators, at the forefront of capitalism. As such, they have done very well out of their famed prudence. Because of this, even as religion has become less important in Dutch public life, Calvinistic thrift remains a central aspect of life here. After all, why fix something that isn’t broken?

Well, for better or worse, the advent of the credit card in the 20th century brought with it sweeping changes. The residents of the Netherlands might feel they dodged the cons, due to their aversion to debt. Yet the pros have also completely passed them by. In particular, cashback culture in the Netherland still lags behind other economies. Things may be changing, though.

Cashback allows consumers to earn a percentage of their spending back. This can be in the form of money, or points or vouchers. To break into the Dutch market, credit card providers here are offering favorable cashback deals. The Flying Blue Silver Card is an example of this. It offers an air-miles scheme enabling customers to earn at least 0.8 miles with each transaction. This enables huge discounts when flying with KLM.

Expats looking to visit home more often are likely to take advantage of such schemes, first. But the opportunity to visit new places at a discount will also catch the eye of Dutch natives. Credit card use will rise in that case. OR: This might explain the use of a credit card whilst in travels.

Wallets Filled with Change

Of course, to claim this is cultural alone is an over-simplification. On top of shunning debt, many consumers don’t use credit cards because they can’t. The fact of the matter is, many locales still do not accept credit cards.

That is starting to change, though. With the shift towards a cashless society currently accelerating, places where cash was once king are opening up to digital cashless payments, including credit card use. Credit card infrastructure has finally arrived in some of the nation’s most prominent grocery stores. It is also present on public transport, among other places. And nowadays, even when infrastructure lags behind, there’s an app for that.

A growing number of digital platforms are helping the Dutch use credit cards to pay for services. For example, the PaybyPhone app uses credit cards to cover parking charges in cities across the Netherlands and in over 10 other countries. Many parking tickets machines still run-on cash or debit cards only. The app allows users to pay for parking from a smartphone. This is particularly handy for international drivers, parking without needing a Dutch debit card and flexible to use on any (rental) car.

Meanwhile, regulatory changes favoring consumers are also accommodating new credit card users here. The recent EU banking directive (PSD2) made credit card transaction costs a thing of the past. Online shopping within the EU has become cheaper for consumers due to this. In this case, the use of credit cards in such shopping has become more attractive. OR: In this case, the Dutch choose credit card for payment as it secures international payment and insures the purchase.

Looking Ahead

There are also signs the consumers of the Netherlands are becoming less resistant to incurring debt. Buy Now, Pay Later (BNPL) is a type of short-term financing. It allows consumers to make purchases and pay for them at a future date. And it is growing here, fast. Research suggests BNPL payments in the country could grow to a value of more than €10 billion ($12 billion) by 2028.

The advent of BNPL may also be set to change the way people in the Netherlands pay with regard to credit cards. As consumers see from BNPL that they needn’t fear all debt, credit card vendors will court these customers. They may emphasize their cashback deals, and even ensure interest rates are more competitive.

In the long run, this will attract more and more credit card users. Especially in connection with the other factors mentioned earlier. As such, competition, new technology and changing attitudes to debt mean that while credit card use is low in the Netherlands, it may not always be so.