SINGAPORE: The amount of credit card debt not paid by the due date hit a record high late in 2024, but the level of indebtedness is not ringing any alarm bells yet.

Rollover balances, the term used for card amounts owing, came in at S$8.3bil in the final quarter of 2024, up 4.9% on the third quarter’s S$7.9bil, which at that point had been the highest recorded since data became available in 2014.

It was also higher than the S$7.3bil in the final three months of 2023.

But the delinquency rate – the percentage of borrowers with payments overdue for 30 days or more – has remained stable, data from the Monetary Authority of Singapore and Credit Bureau Singapore (CBS) showed.

Assistant professor of finance Ruan Tianyue at the NUS Business School said she is not too concerned as the average consumer balance outstanding has remained “roughly the same”.

“It is still under control. I do not think the average balance is very alarming,” she added.

A recent CBS report indicated that the average unsecured credit card balances across different age groups jumped between 1.3% and 5.9%, from the third quarter of 2024 to the fourth.

People aged between 30 and 34 recorded the biggest jump, with average card balances up 5.9% to S$4,448. Those 35 to 39 followed closely behind – their average outstanding balances increased 5.5% to S$5,894.

People over 54 posted the smallest increase of just 1.3% to S$3,950.

The credit card delinquency rate has also stayed around the 1% to 3% range across the age groups.

Those between 40 and 44 had the highest delinquency rate of 3.79%, while the 21 to 29 cohort logged the lowest of 1.98%.

The age group with the biggest increase in card balances – those 30 to 34 – had a delinquency rate of 2.62%. That is an increase of 0.09 percentage points or nine basis points from 2.53% in the previous quarter.

Ruan noted from the CBS report that there were about 30,200 new inquiries for personal loans in the fourth quarter, a rise of 23.4% from the third quarter. This indicates that people may be switching from credit cards to such loans to tide them over difficult times, she said.

“It will be interesting to see whether people who take up these new personal loans can make payments on time, going forward,” Ruan added.

Professor Sumit Agarwal, who teaches finance, economics and real estate at the NUS Business School, said people are taking on more debt, whether personal loans or credit cards, because the cost of living is high.

“People still need to buy and consume necessities. That does not mean there will be defaults,” he added.

Agarwal noted that the government dished out more financial support in February’s Budget.

To mark Singapore’s 60th birthday, all Singaporeans will get between S$600 and S$800 each in SG60 vouchers, on top of personal income tax rebates of up to S$200 for the 2025 year of assessment. This means that income earned in 2024 will benefit from the tax rebate.

Every Singaporean household will also get S$800 worth of community development council (CDC) vouchers and up to S$760 in utilities rebates.

The CDC scheme is a temporary measure that was introduced in June 2020 to help lower-income households cope with cost of living pressures during the lockdowns.

Agarwal said that prices will remain elevated as US tariffs spark fears of trade wars, which will hurt the global economy and fuel inflation, posing a challenge for Singapore given how much it imports.

“Something has to be done to bring the cost of living down and ensure consumers do not feel the pinch,” he noted, adding that this can be achieved by “growing the economy and keeping the unemployment rate low”.

Observers said that the average Singapore household has the financial buffer to withstand any headwinds.

Ruan noted that household networth – the difference between assets and liabilities – is still growing.

Department of Statistics data showed that household networth hit S$3.1 trillion in the fourth quarter of 2024, up 8.4% on the same period in 2023.

Household networth has been positive since the third quarter of 2009, after briefly turning negative in the first half of 2009 and the fourth quarter of 2008.

Positive networth indicates that a typical Singapore household’s assets outweigh their financial obligations, so they can meet commitments when they fall due.

Negative networth, by contrast, means households cannot pay off debts.

Ruan said: “The average Singapore household is on relatively good footing.”

Agarwal said: “Singapore has seen worse than this. The Covid-19 lockdown was a big macro shock, but there was no balance sheet problems at the banks even after that.

“This is a smaller shock relative to the lockdowns.” — The Straits Times/ANN