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05-01-2011, 06:18 AM
Jan 5, 2011
Number of credit cards charges past 6 million mark
Cardholders spending more but are also rolling over more debt
By Harsha Jethnani
FLASHING the plastic has never been more popular in Singapore, with the number of credit cards issued crossing the six million mark for the first time.
That works out to six to seven cards per eligible cardholder, and they are spending more with their plastic arsenal, too, as consumer confidence rebounds strongly.
Based on the latest preliminary figures from the Monetary Authority of Singapore (MAS), the number of main cards crossed the six million mark in October and hit 6.079 million in November.
Including supplementary cards - cards linked to the principal cardholder's cards - the total number of cards based on November's preliminary figures would be 7.46 million.
Singapore crossed the five million mark in main credit cards in November 2008, meaning new cards were added to consumer wallets at a blistering pace.
Market experts suggest the eligible number of cardholders is around one million. The taxman's latest annual report shows about 906,000 taxpayers have assessed income of at least $30,000, which is the minimum annual income required for a card. A back-of-the-envelope calculation works out to 6.7 cards per person.
Banks say the industry estimate for the number of cards per person is around five. United Overseas Bank says a principal cardholder at the bank now holds an average of 5.5 credit cards.
Industry players said this is to be expected. 'In a mature market such as Singapore with a financially savvy consumer base, many consumers hold multiple credit cards,' said a MasterCard spokesman.
A surfeit of plastic also powered monthly card billings to $2.87 billion in November last year, up 20 per cent from November 2009.
People are also rolling over more credit, meaning they do not fully settle their credit card bills every month. Rollover balances rose 7.5 per cent when compared to November 2009.
Experts say the increase in debt rollover could be the result of factors including the general increase in spending.
Another reason is that not all of this debt attracts the punitive 24 per cent interest rate associated with credit cards.
Banks routinely offer promotional rates of below 10 per cent, sometimes as low as 2 or 3 per cent, on rollover debt balances transferred from another credit card issuer, or on cash drawn from a customer's remaining credit limit.
Experts warned against cardholders getting into the habit of rolling over debt. Credit Counselling Singapore's president Kuo How Nam, who has written to the Forum page on these concerns, said the surge in housing loans and growth of rollover balances raise the issue of whether individuals will be able to pay off their debts if the economy stumbles and property prices fall.
Still, credit card charge-off rates - the proportion of rollover debt written off as it cannot be recovered from defaulting customers - have remained relatively stable. This rate was 4.4 per cent last September, down from 5 per cent in June.
This compares favourably with the 8 per cent seen during the Asian financial crisis or the 8.39 per cent rate in the third quarter in the US. But it is higher than Hong Kong's rate of about 2 per cent.
harshamj@sph.com.sg
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Jan 5, 2011
CREDIT COUNSELLING ADVOCATE'S CONCERN
Personal debt bomb
THE real star behind the recent Monetary Authority of Singapore statistics is consumer loans and not business loans ('Business loans surge in sign of upswing'; last Thursday).
Business loans actually contracted from July 2009 until March last year, and showed anaemic growth until the second half of last year.
By contrast, total consumer loans have never declined and have grown steadily with usually double-digit growth year on year. Even in the depths of the financial crisis, total consumer loans were growing at a high single-digit pace from October 2008 to September 2009, before spurting into double-digit territory a year ago.
The growth of total consumer loans has quickened from 10 per cent a year ago to more than 18 per cent for the past three months to reach $150 billion. Business loans managed only a double-digit growth from October to November last year.
The performance of business loans therefore pales in comparison with the growth of consumer loans.
The fast growth can be explained by housing loans. January 2008 housing loan figures were already 16 per cent higher than the corresponding figure in 2007. This double-digit performance lasted until October 2008, when growth figures slipped into the high single-digit figures before going back into double-digit growth in July 2009. Total housing loans are now $111 billion.
Since May last year, housing loans have been growing at more than 20 per cent year on year, a growth rate that must be the highest ever seen in Singapore.
Two other milestones which merit mention are that the total number of main credit cards crossed six million in October last year; and second - which is of greater concern - that rollover balances breached the $4 billion mark in November. This is the amount that is not paid by cardholders and on which interest is charged at usually 24 per cent per annum. Rollover balances have been growing at an average annual rate of 11.5 per cent for the past two years.
Personal indebtedness in Singapore is, therefore, growing unabated and the pace has quickened this year. The recent big surge in housing loans and the growth of rollover balances raise the question of whether Singaporeans, already facing one of the highest debt-to-income ratios in the world, have placed themselves in a very precarious situation.
If the economy stumbles and real estate prices decline, many individuals will be unable to pay off their debts.
Kuo How Nam
President
Credit Counselling Singapore
Number of credit cards charges past 6 million mark
Cardholders spending more but are also rolling over more debt
By Harsha Jethnani
FLASHING the plastic has never been more popular in Singapore, with the number of credit cards issued crossing the six million mark for the first time.
That works out to six to seven cards per eligible cardholder, and they are spending more with their plastic arsenal, too, as consumer confidence rebounds strongly.
Based on the latest preliminary figures from the Monetary Authority of Singapore (MAS), the number of main cards crossed the six million mark in October and hit 6.079 million in November.
Including supplementary cards - cards linked to the principal cardholder's cards - the total number of cards based on November's preliminary figures would be 7.46 million.
Singapore crossed the five million mark in main credit cards in November 2008, meaning new cards were added to consumer wallets at a blistering pace.
Market experts suggest the eligible number of cardholders is around one million. The taxman's latest annual report shows about 906,000 taxpayers have assessed income of at least $30,000, which is the minimum annual income required for a card. A back-of-the-envelope calculation works out to 6.7 cards per person.
Banks say the industry estimate for the number of cards per person is around five. United Overseas Bank says a principal cardholder at the bank now holds an average of 5.5 credit cards.
Industry players said this is to be expected. 'In a mature market such as Singapore with a financially savvy consumer base, many consumers hold multiple credit cards,' said a MasterCard spokesman.
A surfeit of plastic also powered monthly card billings to $2.87 billion in November last year, up 20 per cent from November 2009.
People are also rolling over more credit, meaning they do not fully settle their credit card bills every month. Rollover balances rose 7.5 per cent when compared to November 2009.
Experts say the increase in debt rollover could be the result of factors including the general increase in spending.
Another reason is that not all of this debt attracts the punitive 24 per cent interest rate associated with credit cards.
Banks routinely offer promotional rates of below 10 per cent, sometimes as low as 2 or 3 per cent, on rollover debt balances transferred from another credit card issuer, or on cash drawn from a customer's remaining credit limit.
Experts warned against cardholders getting into the habit of rolling over debt. Credit Counselling Singapore's president Kuo How Nam, who has written to the Forum page on these concerns, said the surge in housing loans and growth of rollover balances raise the issue of whether individuals will be able to pay off their debts if the economy stumbles and property prices fall.
Still, credit card charge-off rates - the proportion of rollover debt written off as it cannot be recovered from defaulting customers - have remained relatively stable. This rate was 4.4 per cent last September, down from 5 per cent in June.
This compares favourably with the 8 per cent seen during the Asian financial crisis or the 8.39 per cent rate in the third quarter in the US. But it is higher than Hong Kong's rate of about 2 per cent.
harshamj@sph.com.sg
----------------------------------------------------------
Jan 5, 2011
CREDIT COUNSELLING ADVOCATE'S CONCERN
Personal debt bomb
THE real star behind the recent Monetary Authority of Singapore statistics is consumer loans and not business loans ('Business loans surge in sign of upswing'; last Thursday).
Business loans actually contracted from July 2009 until March last year, and showed anaemic growth until the second half of last year.
By contrast, total consumer loans have never declined and have grown steadily with usually double-digit growth year on year. Even in the depths of the financial crisis, total consumer loans were growing at a high single-digit pace from October 2008 to September 2009, before spurting into double-digit territory a year ago.
The growth of total consumer loans has quickened from 10 per cent a year ago to more than 18 per cent for the past three months to reach $150 billion. Business loans managed only a double-digit growth from October to November last year.
The performance of business loans therefore pales in comparison with the growth of consumer loans.
The fast growth can be explained by housing loans. January 2008 housing loan figures were already 16 per cent higher than the corresponding figure in 2007. This double-digit performance lasted until October 2008, when growth figures slipped into the high single-digit figures before going back into double-digit growth in July 2009. Total housing loans are now $111 billion.
Since May last year, housing loans have been growing at more than 20 per cent year on year, a growth rate that must be the highest ever seen in Singapore.
Two other milestones which merit mention are that the total number of main credit cards crossed six million in October last year; and second - which is of greater concern - that rollover balances breached the $4 billion mark in November. This is the amount that is not paid by cardholders and on which interest is charged at usually 24 per cent per annum. Rollover balances have been growing at an average annual rate of 11.5 per cent for the past two years.
Personal indebtedness in Singapore is, therefore, growing unabated and the pace has quickened this year. The recent big surge in housing loans and the growth of rollover balances raise the question of whether Singaporeans, already facing one of the highest debt-to-income ratios in the world, have placed themselves in a very precarious situation.
If the economy stumbles and real estate prices decline, many individuals will be unable to pay off their debts.
Kuo How Nam
President
Credit Counselling Singapore
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