Retirees less of a credit risk than young people

Retirees less of a credit risk than young people

SINGAPORE - It was disheartening to read real- life stories of young people struggling to clear their personal debts ("So hard to clear debt"; last Sunday). More so when the money is borrowed for legitimate needs like medical expenses and children's education.

That being said, it boils down to a lack of financial discipline, compounded by the easy availability of credit.

Money should be set aside in good times, and one should spend prudently and within one's means.

And is it a wonder that a fresh graduate can have up to 10 credit cards, or that more than one in three credit card-holders here roll over balances ("A wallet full of credit cards and a bellyful of debt"; last Sunday)?

Even though unsecured loans granted by moneylenders made up less than 3 per cent of overall debt here, it is only right for the Monetary Authority of Singapore to extend its rules on bank lending to licensed moneylenders.

Some licensed moneylenders arbitrarily slap a 240 per cent late interest fee on defaulting clients ("240% late interest fee"; last Sunday). While moneylenders need to make profits, such excessive interest fees serve only to speed up loan defaults for already-desperate borrowers.

At the same time, banks are loath to extend credit cards to prudent and financially capable retirees simply because these seniors have no income. The irony is that they have little or no financial commitments and are less of a credit risk than young people with heavy financial and family commitments, who also face uncertainty over their job security.

Hopefully, young people will learn to rein in their spending and save for a rainy day, while banks will be more accommodating towards senior citizens to meet their limited banking needs.

Raymond Koh Bock Swi

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