SINGAPORE – Credit Card Debt Overview

In a striking financial trend, the amount of credit card debt that customers have failed to pay by the due date has reached an all-time high of $8.3 billion in the last quarter of 2024. This marks a notable increase of 4.9% from the previous quarter’s $7.9 billion, which had already been the highest recorded since data collection began in 2014. When compared to the same period in 2023, this figure represents a significant rise from $7.3 billion.

Delinquency Rates

Despite the soaring debt levels, the delinquency rate—defined as the percentage of borrowers who have missed payments for 30 days or more—has remained relatively stable, hovering between 1% to 3%. According to the Monetary Authority of Singapore (MAS) and Credit Bureau Singapore (CBS), this stability is reassuring for economic observers.

Expert Opinions

Dr. Ruan Tianyue, an Assistant Professor of Finance at the NUS Business School, expressed a cautiously optimistic viewpoint. She noted, "The average consumer balance outstanding has remained roughly the same,” indicating that while the debt is high, it does not yet signal a crisis for consumers.

Age Group Analysis

A recent CBS analysis highlighted that average unsecured credit card balances increased across various age groups, with rises ranging from 1.3% to 5.9% from the third to the fourth quarter of 2024. The age demographic of 30 to 34 years saw the most significant increase, with average balances reaching $4,448—up 5.9%. Those aged 35 to 39 followed closely, with an average outstanding balance of $5,894—an increase of 5.5%. In contrast, the over-54s group saw only a modest growth of 1.3%, taking their average balance to $3,950.

Delinquency Rates Across Age Groups

The delinquency rate also reflects varied trends across age groups, with the highest rate found among those aged 40 to 44 at 3.79%, whereas the lowest rate of 1.98% was observed in the 21 to 29 age group. The 30 to 34 demographic, which saw the largest uptick in balances, had a delinquency rate climbing slightly to 2.62%.

Increase in Personal Loan Inquiries

In addition, Professor Ruan noted a significant increase in personal loan inquiries, with around 30,200 new requests emerging in the fourth quarter alone—a jump of 23.4% from the previous quarter. This rise suggests that consumers may be transitioning from credit card debt to personal loans in an effort to manage financial pressures.

Ongoing Economic Challenges

Professor Sumit Agarwal of NUS Business School pointed to the ongoing high cost of living as a major factor driving increased borrowing. "People still need to buy and consume necessities. That does not mean there will be defaults," he remarked, emphasizing the resilience of Singaporean households.

Government Support Initiatives

To further support the population, the government is stepping in with financial relief measures. As part of the celebrations for Singapore's 60th birthday, the government will distribute SG60 vouchers worth between $600 to $800 to all Singaporeans, alongside personal income tax rebates of up to $200 for the 2025 assessment year. Additionally, households will receive CDC vouchers worth $800 and utilities rebates up to $760, aimed at alleviating the financial strain on lower-income families.

Global Economic Influences

Prof. Agarwal did caution that global conditions could present challenges, particularly the implications of US tariffs and potential trade wars which could stoke inflation and affect Singapore’s import-dependent economy. "Something must be done to drive down living costs and ensure consumers remain financially comfortable," he stated.

Household Financial Health

Despite the upward trend in credit card debt, analysts believe that most Singaporean households have a financial cushion that can endure economic fluctuations. Data from the Department of Statistics reveals that Singapore's household net worth soared to $3.1 trillion in the fourth quarter of 2024, an increase of 8.4% from the same time last year. This positive net worth reflects a strong asset-to-liability ratio among households, indicating their capacity to meet financial commitments.

Conclusion and Outlook

In closing, Prof. Ruan expressed optimism about the financial health of the average Singaporean household. "The average household is on relatively good footing," she concluded. With these insights, many may wonder: Are we on the brink of a debt crisis, or is this merely a manageable economic phase for Singapore? Time will tell as the situation evolves.