S'poreans in 20s fastest-growing credit card users

They pay bills on time but often, it's just the minimum sum owing: Bureau


SINGAPOREANS in their 20s have posted the fastest rate of increase in credit card use among all age groups, a new survey has found.

They swipe their plastic more often than other consumers, especially for big-ticket items such as travel, gadgets, dining and wedding items, bankers say.

However, these young card-savvy types, who are just starting to scale the corporate ladder, spend less on average than older consumers.

And they are generally prudent when it comes to paying the monthly bill on time - although often, they pay just the minimum sum owing. That means the rest of the card debt spills over to the next month.

Figures from the Credit Bureau Singapore (CBS), released yesterday, showed the proportion of credit card applicants aged 21 to 29 last year surged to 20 per cent from a year earlier, well up from 14 per cent in 2005.

This reflects the 'rising income levels of working adults in their 20s', who see credit as a convenient form of payment and a 'lifestyle choice', said Mr Mark Rowley, CBS general manager.

No wonder then that banks are intensifying efforts to roll out lifestyle perks that appeal to this segment. Banks say this segment is the fastest-growing age group in new credit card applications.

This group also makes up a significant proportion of banks' credit card business. For instance, more than a third of United Overseas Bank's new card applicants are aged below 30.

Customers aged 21 to 29 also make up 'the majority of the more than 2,000 cardholders' for Standard Chartered's Platinum Access Card, said Mr Vincent Lim, general manager for credit cards and personal loans.

The card, launched in December, automatically converts any purchase over $100 to a two-year fixed instalment plan.

Not surprisingly, this young group made up the largest share of the 84,500 consumers who succeeded in getting a credit card for the first time last year, said CBS.

About 36 per cent of new cardholders were aged between 21 and 29, compared with 21 per cent who were aged between 30 and 34. The latter group applied for the most number of credit cards last year, inching up from 23.4 per cent of total card applications in 2005 to 23.6 per cent last year.

However, while the appetite of consumers in their 20s for credit is rising faster than the rest of the population, the 'good news is that they are showing prudent use of credit', said Mr Rowley.

The percentage of consumers aged between 21 and 29 who missed at least one payment on one or more of their credit card accounts was 6.6 per cent last year, down from 7.05 per cent in 2005. This compares with an overall average across all cardholders of 8.14 per cent, down from 8.9 per cent a year earlier.

Bankers say the younger group tends to be more savvy financially, and they may have been influenced by growing publicity by CBS and banks on how to properly manage credit card debt and finances.

The average monthly balance of each consumer, based on combined expenditure on all of his credit cards, rose 3.6 per cent to $3,952, while the average for the 21 to 29 age group was $2,258, up from $2,180 in 2005.

Aware of the tendency of young cardholders to buy big-ticket items with plastic, banks have packaged cards to offer more travel and dining discounts and privileges.

For instance, the DBS Black Card 'appeals to the jet-setting individuals because of its KrisFlyer rewards programme', said Mr Raymond Ang, the bank's managing director for cards and unsecured loans.

While older cardholders may emphasise more on rebates and promotions, the younger ones also look for branding of the cards, said Ms Wong Ting Mei, OCBC Bank's head of credit cards.