Credit card debtors get help

Credit card debtors get help

SINGAPORE - Marketing consultant Anna (not her real name), has seven credit cards, two credit lines, and a total debt of $60,000.

After the company she worked for was restructured two years ago, Anna's pay was cut by 70 per cent. She had difficulty paying the minimum sum - which ranged from $100 to $300 -on her credit cards and credit lines.

She was earning $3,000 after tax and CPF deductions before her salary was slashed.

"I started to pay less than the minimum sum on the cards. And it got to the stage where I would pay for one card but not the other. The banks would get their lawyers to send out letters, and the problem snowballed," said the 51-year-old.

On Friday, the Monetary Authority of Singapore( MAS) issued proposals to rein in credit spenders even further, and is seeking feedback from the public.

The changes (see report below) are aimed at helping consumers make better borrowing decisions, or those at risk of credit problems from getting into greater debt, while improving the lending and disclosure practices of financial institutions.

In October, the Credit Bureau Singapore reported that while people defaulting on their credit card payments had dropped by 14 per cent over the last 10 years, the average monthly rollover on credit card balances per consumer has increased by 54 per cent to $5,034 in 2012 from $3,275 in 2002.

Women now make up 41 per cent of credit card customers against 33 per cent in 2002. The number of credit card customers, too, has almost doubled to 1.45 million over the same period.

Anna is not alone. Market analyst Huang Limin, 29, owes $6,500 on her two credit cards and one credit line. She declined to reveal her salary but admits she has "overleveraged" herself, spending on her credit cards on holidays, alcoholic drinks and clothes.

Pay off

Said Miss Huang: "Servicing my debt has affected my ability to save. It's going to take a long time to pay off the debt. I've already paid offone card and cancelled it."

As for Anna, she said that it will take her seven years to pay off the loan.

The divorcee recently signed herself up for the debt management programme of Credit Counselling Singapore (CCS).

In her bid to bond with her teenage son who lives with her ex-husband, she had chalked up a huge debt over the last five years by not paying off her outstanding balances in full, and spending huge amounts on overseas trips with him.

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