Two reports on credit card debt issue.
The report mentions "Again, the MAS has started the ball rolling with the launch of a national financial education programme called MoneySENSE. Initiatives like the CCS can also help educate the public on the responsible use of credit."
Obviously, these effort will be too late for some already in the credit card debt trap like the one here.
Look at the issues like declining Chinese language standard, low birth rate, power blackout, and this consumer credit card debts, MNCs vs Entrepreneurship etc.
Do we see a pattern of Gov failed to spot the trend and act early to arrest the problems. Is the Gov taking timely actions on these issues or is it doing too little too late?
What can be done those already in the credit card debt trap?
==========================
A letter to ST on Jul 11, 2004:
http://straitstimes.asia1.com.sg/invest/story/0,4386,260922,00.html?
Trapped in debt but I can't afford to go bankrupt
Q I AM 39 years old, with two children and a working wife. I have
several outstanding credit-card and credit-line debts amounting to
nearly $70,000, no thanks to poor discipline in my spending habits
when I was younger.
Although I have been dutifully paying the minimum sum each month, I
cannot reduce my debt. My monthly net salary of $3,000 is just enough
to cover the minimum repayment, with nothing left for family expenses.
Bankruptcy is not an option as I would lose my job. It's a position
in a bank that took me years to secure because of a lack of
qualifications.
==========================
The credit trap
Irresponsible plastic addicts could cause full-blown crisis
Wednesday • October 20, 2004
Francis Kan
Deputy Business Editor
francis@n...
BRITAIN'S biggest banks came under fire this week for pushing
credit-card debt in the country to a staggering $180 billion.
The aggressive lending by financial institutions has caused such an
uproar in the United Kingdom that the British Parliament is set to
grill top bank executives on the issue this week.
Things came to head when a forklift driver hanged himself after
running up a debt of £100,000 ($301,000) on 16 credit cards.
While the problem of credit-card indebtedness in Singapore has yet to
reach such a dramatic state of affairs, recent evidence suggests that
the situation — if left untended — could spiral similarly out of control.
Outstanding balances rolled over on credit cards surged from $311
million in 1991 to a whopping $2.4 billion in March this year.
And it appears, Singaporeans can't keep a lid on the mounting bills.
The recently-launched Credit Counselling Singapore (CCS) — a service
which gives financial advice to debtors — was inundated with hundreds
of calls last week, just days after it went into operation.
Part of the problem could arguably be put down to aggressive
competition in the credit-card arena.
American Express fired the latest salvo in this fight, when it coupled
its high-end Platinum card with a low-end minimum-income requirement.
With a mere $50,000 annual salary, young Singaporean executives can
now join an exclusive club that once admitted members by invitation only.
Marketing brochures depict pictures of luscious golf courses, while in
Orchard Road shopping malls, "butlers" decked out in long tails woo
passers-by to sign up.
So, how does one afford a million-dollar lifestyle on a $50,000 pay
packet?
Simple! Charge it to your credit card and roll-over what you can't pay
for.
The marketing blitz is not restricted to the yuppie market.
There are cards for union members, plastic for budget air travellers
and credit for the arts connoisseur.
Whatever your sex, occupation or favourite restaurant, there's
probably a piece of plastic with your name on it.
And whether by phone, in person, or through the mass media, the credit
card marketers are mavericks at putting that card in your hands.
Its no wonder the number of cards in circulation has surged from 1.4
million in 1992 to almost 4 million currently.
Some have pointed to exorbitant interest charges on credit card debt —
as high as 24 per cent per annum — as contributing to the problem.
Such attractive margins mean that banks have little incentive to
discourage rollovers, even if it means having to write off some bad debts.
But the blame should not lie exclusively with the banks, as
individuals who abuse credit are also responsible.
Singaporeans have simply become addicted to plastic and are using
credit irresponsibly.
Recent data shows that three in four cardholders here have, in at
least one of the previous 12 months, rolled over their debt.
Stories of people holding six or seven cards, using one to pay off the
minimum sum on another, have become all too familiar.
So, what can be done to stop a worrying situation from escalating into
a full-blown crisis?
Thankfully, steps are already in place to deal with the problem.
The Credit Bureau was set up in 2002 to enable sharing of data between
banks and help them better assess the credit-worthiness of borrowers.
Further, the Monetary Authority of Singapore (MAS) took steps earlier
this year to crack down on aggressive credit-card marketing by
restricting the solicitation of new business on the streets.
Yet, perhaps more can be done.
In the UK, for instance, lawmakers are calling for a reduction in
interest charges, giving credit-card companies less reason to lend.
The better sharing of data between banks, whether bilaterally or
through the credit bureau, could also help prevent customers being
granted an excessive amount of unsecured credit.
Finally, more education is required to help Singaporeans manage their
finances.
Again, the MAS has started the ball rolling with the launch of a
national financial education programme called MoneySENSE.
Initiatives like the CCS can also help educate the public on the
responsible use of credit.
Hopefully, the lessons will sink in.