MORE PEOPLE IN CREDIT CARD DEBT

MORE PEOPLE IN CREDIT CARD DEBT

ACCORDING TO THE CREDIT BUREAU SINGAPORE, THE TOTAL NUMBER OF DELINQUENT DEBTORS HIT MORE THAN 101,490 THIS YEAR

Nov 22, 2015 6:00am
BY SEOW YUN RONG

He had a good job that paid him $7,500 a month but the way he used his credit cards, you would think he earned a lot more.

The debts snowballed and before Mr Toh knew it, he owed $103,000 to the banks.

His story is typical of many who have been caught up in a credit card debt situation which has spiralled out of control.

In 2011, the total number of delinquent debtors was just over 73,000.

These are people who pay nothing or less than the minimum sum on their credit card debts.

According to the Credit Bureau Singapore, it has hit more than 101,493 this year.

It is the same story with revolving debtors who roll their credit card debts by covering at least the minimum sum.

More people are also turning to debt counsellors for help.

According to Credit Counselling Singapore (CCS), the biggest credit card debt this year is a whopping $1,552,000.

Mr Toh, too, had no choice but to pick up the phone when he realised he had lost all control.

As with everything, it started small.

The 39-year-old, who now works as a sales officer and part-time taxi driver, was a regional sales manager in 2005 and frequently travelled.

He carried several credit cards to cover his travelling expenses, which his employers reimbursed the following month.

Despite the reimbursement, he'd pay only the monthly minimum sum of $2,500 for his five credit cards for about three years.

He says: "I was earning quite a decent sum then, so I thought I could give my family a better life and pay back the following month."

But he lost track of how much he was spending and how much he could claim, he adds.

Besides paying his parents' medical bills of about $1,000 a month, he would also take his family of seven to restaurants and shopping malls twice a week. A night out typically cost $300.

QUIT JOB

It all went downhill after Mr Toh quit his job in 2012.

He then earned only about $3,500 as a part-time sales officer and taxi driver but the debts followed him.

He says: "At that time, I only thought of my family. I didn't have the motivation to pay more than the minimum sum for my debts."

He did not have enough left over to cover the $2,500 minimum payment each month.

Mr Toh took a bank loan of $10,000 to pay off his credit card debts, only to find out that it was not enough and that loan accumulated interest, too.

His credit card debt snowballed to $103,000 and his financial struggles contributed to his divorce in 2012.

Last year, he finally sought help from CCS.

He now follows the Debt Management Programme which will help him clear all his debt in the next three years.

He says he is thankful for the help from CCS. His sisters are also helping by paying for their parents' medical bills.

Mr Toh says: "Without the support from CCS and my family, I don't think I could ever finish paying my debt."

People who need help shouldn't wait, says Ms Tan Huey Min of CCS.

"People with a debt issue have to deal with it as soon as possible before it snowballs into a greater sum every month," she adds.

Debtors must be mindful of economy
Last month, Prime Minister Lee Hsien Loong warned that Singapore must brace itself for a possible downturn.

Ms Tan Huey Min of Credit Counselling Singapore (CCS) says debtors have to be mindful of the economy and how it will affect their income.

"Once they know that their income is affected, they have to take quick actions to solve the problem before it snowballs into a greater debt," she says.

She adds that while some people gamble their way into debt, the top reason for getting into credit card debt is overspending.

Here's how two individuals found themselves on the slippery slope of credit card debt.

SHOPPING

Mr Nor, 57, often used his credit cards when shopping in Malaysia and Indonesia.

Thinking that he was saving money because of the exchange rate, he used his credit cards to pay for almost everything.

He says: "It was so convenient to keep using my credit cards even in supermarkets."

Mr Nor was earning about $2,000 a month as an administrative officer and an extra $1,000 as a part-time driver.

In 2009, he lost his part-time job and had incurred a debt of about $60,000 from using four credit cards and from four bank loans.

Even though he paid the total minimum sum of $2,000 a month for four years, he still owed $60,000 in 2013 because of interest.

He says: "When the bank warned me about paying immediately, I was so afraid because if I didn't pay up, they said they would take me to court."

He has been on CCS' Debt Management Programme (DMP) for about two years now. In four years' time, he will be debt-free.

GAMBLING

By the time he hit rock bottom in 2012, regional product manager Lee, 44, had a debt of $550,000.

His problem was gambling. He said he would often take foreign visitors to the casinos here but eventually developed an interest in gaming himself.

He says: "The boredom I had after work eventually led to me gambling just for fun.

"As my bets got bigger and bigger, using the credit card became very convenient."

To pay off his credit card debts, he took up three bank loans but continued gambling while paying $1,000 to cover the minimum sum for the three cards he had.

He has been on the DMP for two years and has been paying his debt regularly since then.

Learn to manage your debt
A talk on debt management will be held today at Khoo Teck Puat Hospital.

Jointly organised by National Addictions Management Service, Khoo Teck Puat Hospital and North West Community Development Council, the talk is open to the public.

WHAT 
About National Addictions Awareness Day WHEN
Today, 10am to 3pm WHERE 
Khoo Teck Puat Hospital

For more details, go to www.nams.sg/arc

BY THE NUMBERS

TOTAL NUMBER OF CREDIT CARD HOLDERS 
IN SINGAPORE

1,611,008

2015

1,388,828

2011

DEBTORS SEEKING HELP

3,308

2015

2,458

2014

1,838

2013

AVERAGE DEBT PER DEBTOR WHO SOUGHT HELP

$99,623.25

2015

$82,940.25

2013

DELINQUENT DEBTORS (PAYING NOTHING OR LESS THAN MINIMUM SUM)

101,493

2015

73,607

2011

REVOLVING DEBTORS (ROLLING DEBT BY COVERING ONLY MINIMUM SUM)

566,966

2015

510,687

2011

BIGGEST DEBT AMOUNT$1,552,000

2015

$1,281,042

2014

$1,707,657

2013

All figures are from Credit Bureau Singapore and Credit Counselling Singapore. Figures for this year are as of September.

Helplines

The Association of Banks in Singapore introduced the Repayment Assistance Scheme (RAS) this year to help borrowers reduce their credit card debt and other unsecured credit loans over time.

The RAS is administered by the Credit Counseling Singapore (CCS), which centralises repayment solutions.

To be eligible, your income must be less than $120,000 per annum and your outstanding unsecured debt must be greater than your annual income before June 1 this year.

RAS: 6996-6006
CCS: 6225-5227
National Addictions Management Service: 1800-6668-668



- wong chee tat :)