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Can this be right? Frequent revolver rate is 25%?? I find it hard to believe that 1/4 of the credit card population is willing to pay 24% per annum for THREE consecutive months! Confused

Business Times - 30 Jan 2012

Credit card debt and spending hit record highs


November frequent revolver rate steady, defaulter rate lower

By SIOW LI SEN

(SINGAPORE) Credit card spending and debt last year rose to all-time highs as consumers here grew increasingly immune to the non-stop flow of bad news from natural disasters to economic turmoil in the eurozone.

Even warnings that growth at home will slow this year to below 3 per cent did not dent the feel-good spending which bankers say is due to Singapore's stable economy and low unemployment rate.

The economy could have grown as much as 5 per cent last year, according to some economists last week, while the unemployment rate in September dipped to 2 per cent, close to a three-year low.

Thus, there is little worry over bad debts, and default rates have remained steady.

'We have observed that credit card bad debt is relatively stable, mainly attributed to a stable economy and employment rates in Singapore,' said Alice Goh, OCBC Bank head of cards. 'We do not foresee an uptrend in delinquency rates.'

And while official figures for December is not out yet, several banks say that it was the best month ever as customers flashed their cards to splurge on dining, clothes, jewellery and watches, travel and even cars.

'While we don't track single transactions of customers, we are aware of some customers making large transactions on their Standard Chartered credit cards such as the purchase of luxury cars,' Kartik Taneja, Standard Chartered Bank head of unsecured lending for Singapore and South-east Asia.

Latest data from the Monetary Authority of Singapore shows that in November last year, total card billings rose 10.3 per cent from a year ago to $3.2 billion. This pushed billings for the 11 months of last year to $31.6 billion, exceeding the $31.1 billion for the whole of 2010.

November's rollover balance was up 12.5 per cent from a year ago at $4.5 million - also an all-time high.

Bad debts, though, fell to $13.2 million from $13.4 million.

According to Credit Bureau (Singapore) Pte Ltd (CBS), the frequent-revolver rate for November last year was steady at 25.33 per cent, from 25.58 per cent a year ago, while the defaulter rate improved to 0.12 per cent from 0.14 per cent. Things improved despite the credit card population growing 6.6 per cent to 1.29 million.

A frequent revolver is someone who does not pay in full for three consecutive months.

William Lim, CBS executive director, said that what's important was to track the revolving accounts and it has been unchanged although spending has gone up.

Defaults are correlated to unemployment, he added.

Bankers say that the double-digit growth in credit card spending is partly due to more big spenders splashing out.

Citibank saw significant growth in spending by all customers, including the affluent, said Jacqueline Tan, Citibank Singapore head of credit payment products.

In particular, spending on dining and travel rose 20-25 per cent from 2010 to 2011, said Ms Tan.

In the last six months (July-December last year), total spend and number of transactions of affluent cardmembers grew by 20-25 per cent, compared to the year before, she said. To Citibank, an affluent cardmember has an annual income above $120,000.

United Overseas Bank said that for December, it saw a double-digit year-on-year increase in card spend among its affluent customers, defined as those with at least $100,000 in annual income.

'Dining was the top spend category during this festive season followed by retail purchases of watches & jewellery,' said Gan Ai Im, UOB regional & Singapore head of cards & payment products.

Harmander Mahal, HSBC Singapore head of wealth and consumer assets, said that the bank's biggest credit card spend category last year was on luxury travel, with customers using the plastic to pay for bookings on major airlines - as opposed to budget airlines; five-star hotels; and high-end dining.

Said Alan Lau, Maybank Singapore head of consumer bank: 'We noticed higher spending of affluent cardmembers in the areas of fashion, medical care and travel.'

I suspect tt 25% does nt mean 1/4 of cc population, ie. 0.25*1.3mil = 400k.
based on rollover balance of 4.5mil for nov n population of 400k, avg rollover/card = 4.5mil/400k = 10sgd... tt"s too little..

so most prob, I guess 25% is derived from the "denominator of total no. of revolvers"