Parliamentary Replies
Published Date: 16 May 2005

Reply to PQ on Credit Cards

Question No 17
Notice Paper No. 81 of 2005
For Written Answer

Date: For Parliament Sitting on 16 May 2005

Name and Constituency of Member of Parliament
Assoc Prof Ong Soh Khim



To ask the Senior Minister (a) whether the amendment of the Banking (Credit Card and Charge Card) Regulations in 2004 has led to the problems of the $2.6 billion card debt of Singaporeans; and (b) what are the measures that the Ministry will take to ensure that financial institutions conduct proper checks of the applicants before approving the applications for credit and charge cards, and credit facilities and balance transfers to prevent further increase of this card debt.

Note: The above Question was originally directed to Prime Minister and Minister for Finance (vide Q. *17 in Notice Paper No. 81 of 2005)


1.  When the Monetary Authority of Singapore (MAS) amended the Banking (Credit Card and Charge Card) Regulations ("the Regulations") in 2004, we retained the two key measures that promote the Government's objective of discouraging Singaporeans from spending beyond their means. These are a minimum annual income of $30,000 to qualify for a credit card and a maximum credit limit of twice the cardholder's monthly income. Some amendments were made to give flexibility to card issuers and choice to cardholders without compromising the fundamental objective.  However, these amendments do not make it easier for Singaporeans to obtain credit.

2.  Assoc Prof Ong is concerned with the $2.6b rollover balance of Singaporeans.  In fact, the growth in rollover balance has slowed in the last few years. It grew by 3% in 2004.  We have also looked at the rate of credit card defaults, which is a better indicator of whether cardholders are spending beyond their means.  On this measure, the adjusted charge-off rates for Singapore averaged at 5% between 2002 and 2004 . This is comparable to that in other countries.  It is in fact lower than the average charge-off rate in Hong Kong  which was 9% during the same period.

3.  Assoc Prof Ong asked about the measures in place to ensure that financial institutions conduct proper checks on applicants for various credit facilities. Banks and other credit card issuers are required to comply with MAS' regulations on credit cards, including obtaining documentary evidence of applicants' incomes. We conduct periodic inspections to ensure compliance with these requirements.

4.  While we have rules in place to curb the easy availability of credit, Singaporeans have to take personal responsibility for their finances and ensure that they do not incur debt in excess of their ability to repay.  That is why the MAS and other government agencies have been working with industry and community organisations on the MoneySENSE national financial education programme, which aims to help Singaporeans acquire the skills and knowledge to better manage their finances.  MAS will continue to work with the Association of Banks in Singapore (ABS) and Consumer Association of Singapore (CASE) to educate consumers on the consequences of late payment on credit cards, and how penalties and late interest charges are computed.   Through the efforts of MoneySENSE and other similar programmes, we hope to help Singaporeans manage their finances proactively and use credit responsibly.

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