20-01-2011, 07:58 AM
Jan 20, 2011
Seniors post lowest card default rate
Figure is one-third to half that of other age groups
By Gabriel Chen, Finance Correspondent
CREDIT cardholders aged over 60 have recorded the lowest rate of default on their repayments among all age categories here, according to new consumer data.
Only eight cardholders in every 10,000 in this group had defaulted.
By contrast, those aged in their 30s were the worst defaulters, with 21 in every 10,000 tripping up on plastic debt - a default rate of 0.21 per cent.
The data, relating to the period from December 2009 to November last year, came from Credit Bureau Singapore (CBS), which defines default as when an account is written off by a bank.
CBS data also showed that the rate of credit card defaults by consumers older than 60 is about one-third to half that of the other age groups, which range from 0.14 per cent to 0.21 per cent.
In fact, no matter how you slice and dice the numbers, the elderly come out with the lowest default rate.
New figures from another credit information supplier, DP Credit Bureau, yesterday highlighted both a steady pattern of improvements and decline in defaults as people get older. The percentage of credit cardholders over 60 defaulting on debt over the last year was between 0.96 per cent and 1.33 per cent, it said.
It defines defaults more broadly: consumers with debt written off or with a non-payment period of 90 days or more.
The highest percentage of default - between 6.9 per cent and 7.62 per cent - was for those in the 21 to 29 age group.
Also, among people over 60, the percentage who pay their debt in full each month is 82 per cent, compared with 63 per cent for those aged 21 to 29.
What is unclear, however, is whether these numbers really signify that elderly consumers are the most diligent and responsible group of credit card consumers.
It could be the prudent practices of financial institutions in making sure the elderly do not spend beyond their means.
A Monetary Authority of Singapore guideline states that credit card applicants aged over 55 may be eligible for a card if they provide proof of at least $15,000 in annual income. Those over 55 with no monthly income can put down a fixed deposit as security to get a card.
CBS executive director William Lim said: 'As a result of these prudent practices, fewer elderly people are falling off the cliff and getting into credit card bad debt.'
But DP Credit Bureau general manager Lincoln Teo is more inclined towards the belief that wisdom comes with age.
'These figures relate to all credit cardholders, not just new approvals. Many people in the 60-plus age bracket may have had their credit card for many years - it may have been approved when they were in their 40s or 50s,' he said.
'That is why we think the numbers do reflect the attitude and behaviour of each age bracket as it does not just include newly issued cards, but people who have had their cards for some time and migrated into an older age bracket.'
Mr Gerard Ee, chairman of the Council for Third Age, an independent body promoting active ageing here, believes both factors play a part.
'Banks have prudent practices. At the same time, older people have done it all and seen it all to some extent - and the eagerness to spend is much less,' he said.
gabrielc@sph.com.sg
Seniors post lowest card default rate
Figure is one-third to half that of other age groups
By Gabriel Chen, Finance Correspondent
CREDIT cardholders aged over 60 have recorded the lowest rate of default on their repayments among all age categories here, according to new consumer data.
Only eight cardholders in every 10,000 in this group had defaulted.
By contrast, those aged in their 30s were the worst defaulters, with 21 in every 10,000 tripping up on plastic debt - a default rate of 0.21 per cent.
The data, relating to the period from December 2009 to November last year, came from Credit Bureau Singapore (CBS), which defines default as when an account is written off by a bank.
CBS data also showed that the rate of credit card defaults by consumers older than 60 is about one-third to half that of the other age groups, which range from 0.14 per cent to 0.21 per cent.
In fact, no matter how you slice and dice the numbers, the elderly come out with the lowest default rate.
New figures from another credit information supplier, DP Credit Bureau, yesterday highlighted both a steady pattern of improvements and decline in defaults as people get older. The percentage of credit cardholders over 60 defaulting on debt over the last year was between 0.96 per cent and 1.33 per cent, it said.
It defines defaults more broadly: consumers with debt written off or with a non-payment period of 90 days or more.
The highest percentage of default - between 6.9 per cent and 7.62 per cent - was for those in the 21 to 29 age group.
Also, among people over 60, the percentage who pay their debt in full each month is 82 per cent, compared with 63 per cent for those aged 21 to 29.
What is unclear, however, is whether these numbers really signify that elderly consumers are the most diligent and responsible group of credit card consumers.
It could be the prudent practices of financial institutions in making sure the elderly do not spend beyond their means.
A Monetary Authority of Singapore guideline states that credit card applicants aged over 55 may be eligible for a card if they provide proof of at least $15,000 in annual income. Those over 55 with no monthly income can put down a fixed deposit as security to get a card.
CBS executive director William Lim said: 'As a result of these prudent practices, fewer elderly people are falling off the cliff and getting into credit card bad debt.'
But DP Credit Bureau general manager Lincoln Teo is more inclined towards the belief that wisdom comes with age.
'These figures relate to all credit cardholders, not just new approvals. Many people in the 60-plus age bracket may have had their credit card for many years - it may have been approved when they were in their 40s or 50s,' he said.
'That is why we think the numbers do reflect the attitude and behaviour of each age bracket as it does not just include newly issued cards, but people who have had their cards for some time and migrated into an older age bracket.'
Mr Gerard Ee, chairman of the Council for Third Age, an independent body promoting active ageing here, believes both factors play a part.
'Banks have prudent practices. At the same time, older people have done it all and seen it all to some extent - and the eagerness to spend is much less,' he said.
gabrielc@sph.com.sg
