Parliamentary Replies
Published Date: 21 November 2005

Reply to PQ on Credit Card Debt

Question No. 54 & 55
Notice Paper No. 234 of 2005
For Written Answer

 Date: For Parliament Sitting on 21 November 2005

Name and Constituency of Member of Parliament
Q 54 & 55 - Assoc Prof Ong Soh Khim


Q54: To ask the Senior Minister, from 2002 to the present, what are the respective percentages of credit card holders who (i) in each month, paid off their credit card balances in full, carried a balance and paid more than the minimum amount, and carried a balance and paid only the minimum amount due; (ii) owe more than $5 000, $10 000, $20 000 and $30 000 on their credit cards; and (iii) are unable to obtain loans as a result of poor credit payment records.

Q55: To ask the Senior Minister if his Ministry will (i) increase the monthly minimum payment for credit card debt to cover interest, fees and a reasonable amount of the principal, to reduce Singaporeans' long-term debt; (ii) limit the maximum number of cards that can be issued to a single person; and (iii) introduce additional measures to prevent credit cards from becoming a major source of personal debt in Singapore.

Mr Tharman Shanmugaratnam, Minister for Education and Deputy Chairman:

1. Singapore's credit card charge-off rate has been on the decline. It is also lower than that in many other countries.  The charge-off rate, defined as bad debts written off divided by total receivables, has fallen steadily from a peak of 7.0% in Q4 2003 to 3.8% in the first quarter of this year and 2.9% in the third quarter. The charge off rate for Hong Kong was 3.0% and for the US (Q2 2005 data) 4.2%. 
2. In Singapore, credit cards are used mainly as a mode of payment. 17% of credit card debt rolled over for more than one month as at end of Q3 2005. The utilisation rate of credit cards on the whole has also fallen from a high of 24% of credit limits to 17% in Q3 this year. A recent report by Visa also showed that, for every S$100 Singaporean Visa cardholders spent in 2003, they repaid $96. 

3. As the charge-off rates do not suggest a major problem of overborrowing,  there is currently no need to impose further restrictions on the issuance of credit cards. Increasing the minimum payment for credit cards would serve essentially the same purpose as the current maximum credit limit, which is set at twice the cardholder's monthly income. A limit on the number of cards that can be issued to a single person would also be unnecessarily intrusive. It would reduce flexibility and convenience for consumers, many of whom use credit cards as a payment instrument. Card issuers are able to check with Credit Bureau Singapore on the number of credit lines an applicant already has and his repayment record, and would take this into account in deciding whether to extend further credit.

4. MAS will continue to monitor the situation and the Government will implement appropriate measures related to the ease of availability of credit should it become necessary to do so.

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