More young Singaporeans are in debt, with growing number defaulting on loans: Report

SINGAPORE: Debt problems are becoming increasingly common among young Singaporeans, with new data showing a sharp rise in credit card and unsecured loan delinquencies among those under 30.

According to the latest report from Credit Bureau Singapore, the average credit card debt for individuals aged 21 to 29 in the second quarter of this year climbed to more than $2,500, marking a 3 per cent increase from the first quarter. Unsecured loans also rose to nearly $6,600 for the same age group.

Alarmingly, delinquent credit card debt among young borrowers jumped by 2.2% in the second quarter, with delinquency and default rates across the board on the rise.

The proportion of young adults in arrears on credit card debt stood at 2.2%, up eight percentage points from the previous quarter. The rate of non-repayment also surged by 20 percentage points. For unsecured loans, the delinquency rate hit over 11%, the highest among all age groups.

Counselling agencies told Channel 8 that more young people are falling into debt this year due to losses in virtual currency investments. A representative of Credit Counselling Services noted: “This year, we discovered a new reason for trading losses. Cryptocurrency is very popular now, but it is a very high-risk investment.”

She advised, “There is no need to borrow money to invest. Only invest when you have extra savings.”

The number of young people seeking help from counselling centres has also risen sharply. Last year, three in ten debt cases were linked to young adults, but this year that figure has grown to five in ten. Gambling has emerged as the primary driver of financial trouble among this group.

Counsellors warned that many young borrowers are under immense pressure to meet material needs, such as buying a car or preparing for marriage. In their bid to make quick money, some turn to online gambling and finance their bets through credit card loans. Often, banks will call them asking if they want to borrow money, and then they end up with more and more debt, one counsellor explained.

Singapore’s Credit Counselling Service reported that in the first half of this year, 218 young people aged 30 and below sought help, a 44% increase from 151 cases in the same period last year. The main reasons cited were unemployment, gambling, and investment losses.

Financial counsellors advise that individuals should avoid holding too many credit cards and carefully evaluate their repayment ability before taking on new loans. They stress that lifestyle adjustments and expense reductions may be necessary to prevent debt accumulation.