Credit card cheer

The latest numbers from the Credit Bureau Singapore (CBS) show that spending patterns have stayed steady despite the recession.

'The increase in credit card spending is in line with the clear but modest recovery that is under way in the local and global economy,' said CBS executive director William Lim. 'It reflects improving consumer confidence that the economy and job markets are in recovery phase.'

Signs of economic recovery have emerged across key markets in recent weeks, with the official growth forecast for Singapore recently revised to a 2 per cent to 2.5 per cent contraction, up from a 4 per cent to 6 per cent contraction.

Credit card spending patterns in July and August remained largely unchanged from a year ago. Yet credit card delinquencies - bills not paid on time - fell to an all-time low of 4.9 per cent in July.

Consumers spent an average of $4,489 on credit cards in August, an increase of only $43 from the figure in the same month last year. July's average spending of $4,483 was up only $10 from the figure a year earlier.

Mr Lim said that although total spending in the credit card market has gone up, delinquency is at an all-time low as consumers continue to exercise discipline and responsibility in maintaining lower bad debt levels.

In July, only 4.9 per cent of consumers had a delinquent account that was 30 or more days past the due date and that had closed with an outstanding balance. This is the lowest level since October 2002.

A rate of 5.7 per cent was recorded during the Sars outbreak in 2003, when consumers stayed away from public places such as malls and restaurants.

CBS' figures are derived from credit card trends of about one million individual card users. The data was taken from its pool of 20 members - comprising key players in the retail credit sector such as DBS Bank, United Overseas Bank and foreign banks like Maybank.

Many of these banks launched new credit card packages in the last quarter, mostly with enhanced rewards features.

The banks' aggressive marketing campaigns are seen as a sign that their appetite for consumer credit businesses is still strong. They also seem relaxed about the risk of delinquency rates going up amid the increased spending that typically occurs during the year-end festive season.

Ms Alice Goh, OCBC Bank's head of credit cards, said: 'While we expect customers to be prudent as we move into 2010, essential purchases such as groceries and necessities should stay relatively constant. Hence, we do not foresee delinquency rates increasing.'

Mr Lim added: 'Spending is likely to go up due to seasonal factors at the end of the year, but delinquency will likely stay at the same manageable rate unless the unemployment rate increases, which is unlikely given that most companies interviewed recently indicated hiring will rise.'

Card users agree that prudence is the key, downturn or not.

Sales manager Roy Chua, 34, said: 'If anything, the recession made me more conscious about features in credit cards like discounts, cash rebates and rewards redemptions and how I can save by using credit cards.'

Graduate school student Justine Li, 24, added: 'Unlike my friends in the United States who roll over their credit card debts - and some end up with huge outstanding amounts - I think most of us in Singapore are more prudent and typically pay on time, crisis or no crisis.'