Managing Debt | Personal Finance | Article
Worrying Debt Habits of Singaporeans in Their Twenties
by Sophia | 21 Jan 2020 | 3 mins read
How good are we with debt? According to last year’s Credit Consumer Index report, released by Credit Bureau Singapore (CBS), Singaporeans in their twenties have been a bit good and in some areas — but a little bad in others.
In other words, not everything’s rosy.
Let’s take a look at CBS’s latest credit report. We can see a snapshot of the debt habits for our age bracket (20 to 29) within the most common debt categories.
Overall Debt Balances
The overall trend for 20-somethings is that this age bracket has the lowest debt balances across the board. Balances are amounts outstanding under borrowers’ credit facilities.
This comes as no surprise, lower incomes in earlier career stages translate to lower loan quantum eligibility.
Here’s a piece of good news: Singaporeans in their twenties have low delinquency and default rates when it comes to credit card debt.
Delinquency is defined as a borrower missing the repayment date while defaulting refers to a lender having to write-off the debt because a borrower cannot pay them back.
So contrary to the stereotype of millennials abusing their credit cards on shopping, we are actually pretty savvy when it comes to handling our credit card bills.
Overdrafts (Chequing Accounts)
However, everything isn’t quite so perfect. Singaporeans in their 20s are worst at handling cheques (millenials still use cheques!?), as they have the highest default rates.
But all in all, the default rates are still pretty low at 0.24%. The other silver lining is that the amounts are relatively small, with 20-somethings maintaining an average monthly balance below $2,000.
We now come to the Achilles heel for those in their 20s: personal loans.
And this is where things start to look pretty ugly.
While we still remain the age group with the lowest debt balances, but the amounts are getting alarmingly high — at an average figure of $28,166.
Worse yet, delinquency rates are highest among the age groups. 5.89% of all young personal-loaners are struggling to meet payment dates on time, and 0.68% of them simply cannot repay the loan.
One reason for this? Looking at the figure, it could be because they could be overextending themselves by taking out personal loans to pay for a wedding, or to supplement a home renovation loan.
When it comes to taking out loans to finance our cars and automobiles, 20-somethings in Singapore are also the biggest culprits when it comes to delinquency and default.
While the absolute figures are low, it’s an indication that we’re simply not earning enough to own a car at this life stage. Maybe it would be wiser to wait a couple more years before financing a car.
Or, you know… just don’t buy one.
How is your relationship with debt? Are you biting off more than you can chew financially? It’s a good time to take stock of your finances at this point and reflect, especially if you see yourself in some of these statistics — and if you are in trouble, find out how you can clear off debts fast!