EQUITY dealer Q L Loh, 25, was shocked when she found out she
had to pay almost $1,000 in interest after a vacation abroad.
She had charged $5,000 to her two credit cards for the holiday
but could fork out only $2,000 in repayment when the bill
arrived.
Ms Loh paid the remaining $3,000 over the next few months and
incurred an additional interest of about $100 each month. 'I felt
the pinch only when (the interest) snowballed to $1,000,' she said
ruefully.
In the end, she took six months to clear her debt. Ms Loh is
among a growing number of people who repay only a part of their
debt instead of the full amount. They are known as 'revolvers'.
According to Credit Counselling Singapore (CCS), there were
417,000 revolvers in May, up four per cent from last June.
Targeting this group of consumers, CCS and Citibank Singapore
yesterday launched a creditmanagement programme called Use Credit
Wisely.
The initiative includes public talks, an information booklet and
a phone helpline for Citibank customers to seek help in
restructuring their debt.
Said Mr Anil Wadhwani, Citibank Singapore's head of consumer
markets: 'It's our responsibility to reach out to consumers and
share good credit-management practices.'
CCS president Kuo How Nam told my paper that the average debtor
in Singapore has a monthly disposable income of $2,700 and owes
seven creditors up to $70,000. That means he has exhausted his
disposable income two years in advance.
In the first half of this year, CCS handled 227 cases - almost
double the 120 debtors it saw in the same period last year. Common
causes of debt include overspending, loss of jobs or pay cuts, and
business failures.
Six in 10 debtors below 30 years old cited overspending as one
of the main reasons for their financial difficulties, said CCS.
According to figures from the Monetary Authority of Singapore,
banks here wrote off $16.4 million in bad debt in May, up sharply
from the $9.4 million written off in June last year.
-- MY PAPER