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Not Quite Like SARS But …

Numbers missing payments inch up, especially among 25- to 34-year-olds

Alicia Wong

SIGNS are that they are getting younger – consumers unable to meet credit card and personal loan payments, that is.

Latest statistics from the Credit Bureau (Singapore) (CBS) show consumers aged 30 to 34 make up the biggest proportion of those missing payments. One in five delinquent personal loan account and credit card holders last December were in that age group.

Just a percentage-point behind, when it came to missed payments on personal loans, were the 25- to 29-year-olds; while those in their late 30s were second-most likely to miss a credit card payment.

“Younger ones have a different attitude to incurring debt … they think they have many years to grow their income and are more prepared to make financial commitments,” said Credit Counselling Singapore?s (CCS)assistant director Tan Huey Min.

She: noted how, as young people start work, their “new-found wealth” tempts them to spend more.

“It?s a whole chain reaction” – they buy a car, and go out and spend even more, she added. Thus when their salary is cut, they face greater strain.

The CCS is a charity that helps people such as them manage their debt – not to be confused with the CBS which is an industry body that manages customer credit information for financial institutions.

Unsurprisingly, CBS? survey found more consumers unable to meet payments as the economy deteriorated over October to December.

Out of over 1 million credit card-holders, 1.67 per cent missed at least one payment in December, up from 1.45 per cent in September. Slightly over 5 per cent of over 65,000 personal loan holders missed payments in December, compared to 4.24 per cent four months ago.

The bright side? Figures are still below 2003 levels, when Sars hit.

Yet the trend is worrying, feels CBS executive director William Lee, as the downturn has not “bottomed out” and “younger adults are showing an increasing propensitytowards delinquency”.

CCS President Kuo How Nam noted how consumers in their late 20s tend to “live beyond their means” and are more “prone to impulsive behaviour”.

Ms Tan believes 30-somethings could be at greatest risk of incurring debt, as they typically earn less than 40-somethings but are responsible financially for a young child.

In some cases, one spouse stays home to mind the child, so the household income is halved.

Source: Today Newspaper, 25 Feb 2009

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