Written reply to Parliamentary Question on increase in credit card bad debts

Date: For Parliament Sitting on 9 September 2024

Name and Constituency of Member of Parliament

Mr Melvin Yong Yik Chye, MP, Radin Mas SMC

Question:

To ask 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 spiraling into bad debts.

Answer by Mr Gan Kim Yong, Deputy Prime Minister and Minister for Trade and Industry, and Chairman of MAS:

1. Credit card spending rebounded after a contraction during the COVID-19 pandemic. Rollover balances have also increased. 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.

2. 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.

3. 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.

4. 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.

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