Credit Card Risk

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MORE CREDIT CARD DEFAULTERS AMONG YOUNG SINGAPOREAN ADULTS

14 February, 2011 Singapore 25

by Jared Heng

The increasing proportion of credit card defaulters among young Singaporean adults aged 21 to 29 should be closely monitored, Senior Minister Goh Chok Tong said in response to questions in Parliament from MPs who were concerned about credit card debts.

According to Mr Goh, who is also chairman of the Monetary Authority of Singapore (MAS), this group of people accounted for 13.4 per cent of credit card defaulters last November, an increase from 9.4 per cent in January 2008.

Young adults within the age group also contributed to an increase in “frequent revolvers”, or those who have not paid their outstanding balances in full for at least three consecutive months.

Mr Goh said MAS has in place several measures to mitigate the risks of over-borrowing by individuals.

For example, MAS has set the minimum annual income requirement for credit cards at S$30,000 to ensure that credit cards are only issued to individuals who have sufficient financial means to handle them.

The maximum credit limit, including any other unsecured credit facilities that a financial institution can give to such individuals is limited to four times his monthly income.

Financial institutions must also conduct comprehensive credit bureau checks before granting individuals credit cards.

These measures supplement the rigorous credit assessments that MAS expects financial institutions to conduct before they grant credit to customers.

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