~ By Leong Sze Hian ~
I refer to the article “More paid credit card bills on time last year, says credit bureau” (Today, Mar 30) which states that “The number of consumers who missed their credit card payments hit a record low last year, according to the Credit Bureau Singapore (CBS). Figures released by the CBS yesterday showed that 12.55 per cent of consumers missed at least one payment on one or more of their credit cards last year, as compared to 13.89 per cent in 2009 and 12.93 per cent in 2010”.
Since the “total number of credit card holders in its repository rose 6 per cent to 1.29 million”, does it mean that about 161,895 consumers (12.55% of 1.29 million consumers) missed at least one payment on one or more of their credit cards last year?
How many couldn't pay? What does “missed at least one payment” mean? That they could not even pay the minimum required monthly, which I understand is normally about three per cent of the outstanding balance or $50 whichever is higher?
How many are deliquent? That is, they could not even pay the minimum required for more than one month? Is this number ever-growing?
Whilst in percentage terms, those who missed payments have declined slightly by 0.38 per cent last year, the absolute number may have increased because of the growth in the total number of consumers with credit cards – “Last year, 606,844 obtained a new credit card, a 0.26-per-cent increase over the previous year. This is as compared to 2010, when there was a 7.32-per-cent increase over 2009. There was also a marked increase in the number of first-time credit card applicants, which increased by 10.05 per cent to 108,977 – the highest in three years, according to the CBS”.
According to the CBS, “the frequent-revolver rate for November last year was steady at 25.33 per cent, from 25.58 per cent a year ago, while the defaulter rate improved to 0.12 per cent from 0.14 per cent”. Since, “A frequent revolver is someone who does not pay in full for three consecutive months”, does it mean that about 326,757 (25.33% of 1.29 million consumers) or about 1 in 4, did not pay in full for three consecutive months?
Rollover balances at all-time high
In this connection, according to the Monetary Authority of Singapore's (MAS) website, Rollover Balance grew from $4.3 to an all-time high of $4.6 billion, from February 2011 to February 2012. Rollover Balances generally incur interest at 2 per cent per month or about 24 per cent per annum.
- The number of main credit cards grew every month from 6.2 to 7 million between February 2011 and February 2012
- Supplementary cards grew from 1.4 to 1.5 million
- Total Card Billings (monthly) grew from $1.4 to $2.9 billion
- Bad Debts Written Off (monthly) grew from $13.7 to $16.5 million
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