Martin Lee @ Sg
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Rollover Credit Card Debt

According to replies to questions raised in Parliament, the rollover ratio of credit card debt was 15.5% in 2010. The rollover ratio refers to credit card balances outstanding for 30 days or longer as a percentage of total credit card balances.

This is less than the 5-year average of 17% between 2004 and 2008 and below the 20-25% range recorded during the peak period between 1999 and 2003.

In a worrying trend that young people are spending beyond their means, data from Credit Bureau Singapore shows that young adults aged 21-29 represent 39% of new credit cardholders who are frequent revolvers. Little wonder why the banks are targeting these groups of users to sign up for their credit cards.

This group of people also account for a rising share of credit card defaulters, increasing from 9.4% or 123 defaulters in January 2008 to 13.4% or 233 defaulters in November 2010.

The combination of high interest rates charged on credit card balances and the magic of compounding is a sure-fire recipe to financial ruin. Never ever roll over your credit card balances! For those who can afford it, you would be even richer if you had not rolled over your credit card balances.

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