Debated in Parliament on 9 Sep 2024.
Mr Melvin Yong Yik Chye asked the Prime Minister and Minister for Finance with regard to recent statistics from the Monetary Authority of Singapore which show an increase in bad credit card debts of nearly 20% in the first quarter of 2024 (a) whether more can be done to improve consumers’ personal finance literacy; and (b) whether more regulation on credit card spending is necessary to prevent consumers from spiralling into bad debts.
Credit card spending rebounded after a contraction during the COVID-19 pandemic. Roll-over balances have also increased. The Monetary Authority of Singapore (MAS) monitors several indicators, including credit card bad debts that have been written off. Write-offs can be volatile as they depend on debt restructuring discussions. Therefore, MAS also tracks credit card delinquency rates, which give a more current sense of whether consumers are falling behind in their credit card payments. Credit card delinquency rates have remained stable and are still lower than pre-COVID levels.
MoneySENSE, our national financial education programme, actively educates the public on money management skills. With the increase in credit card use and rollover balances alongside the post-COVID recovery, MoneySENSE has urged consumers to not spend beyond their means, and reminded borrowers to prioritise paying off high interest debts like credit card bills to avoid high interest charges. MoneySENSE puts out these messages online and in person at events in collaboration with both the public and private sectors.
MoneySENSE’s partner, the Institute for Financial Literacy, or IFL, provides free financial education and training to consumers, including at their workplaces. Training modules include Basics of Money Management and Understanding Loans and Credit where participants learn how to manage borrowing and resolve debt issues. Consumers can also sign up for free one-on-one financial health clinics run by IFL to learn how to address gaps in their personal finances. We encourage employers and consumers to actively participate in these programmes.
To mitigate the risk of consumer over-indebtedness, MAS has put in place safeguards which were set out in our replies to Parliamentary Questions in May 2023 and January 2024. These safeguards are generally adequate and MAS will continue to monitor the situation and review these measures when necessary. [Please refer to (a) "Review of Rules to Safeguard Against Over-indebtedness", Official Report, 9 May 2023, Vol 95, Issue 103, Written Answers to Questions section; and (b) "Revision of Metrics for Ensuring Appropriate Level of Household Indebtedness Given High Interest Rates", Official Report, 9 January 2024, Vol 95, Issue 118, Written Answers to Questions section.]
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