1st quarter 2009

Consumer spending and credit habits

The following article is a brief overview of the spending habits of consumers belonging to the 21 to 29 age group. The data has been compiled as a year on year comparison.

Number of New Credit Card Consumers
The number of credit card holders belonging to the 21- 29 age group has risen by 39% when compared to a year ago. With the increase over 2008 this segment of consumers constitutes 8% of the total number of consumers making purchases via credit card.

Attributable factors
Some of the key factors explaining the increase in credit card consumers belonging to this demographic are:

• Consumers utilizing multiple credit cards…a credit card may offer benefits such as discounts & promotions that another does not.

• Additional privileges such as frequent-use rewards give incentive for consumers to make more purchases via credit card. E.g.: rewards points or mileage.

• Another factor could be the growing popularity of credit cards as a status symbol among this particular demographic.

• Ease of payment which facilitates utilization of credit cards

• New entrants to the workforce

Number of Credit Card Revolvers
A credit card revolver is defined as an individual who does not pay off his or her entire balance due at the end of the billing cycle. The 21 – 29 year old age group depicted a 40% increase in rollover balance as when compared to a year ago. With the increase the age group constituted 10% of the total rollover balance for 2008.

Credit Card Billings
Credit card billings attributable to the 21- 29 year age group showed an increase of over 65% over the last 12 months as when compared to a year ago. With the increase the demographic constitutes 13% of total credit card billings.

Attributing factors that results in spike of Credit card billings & rollover balances from Age Group 21-29
The increase in billings maybe directly attributed to

• Specific partnerships with retailers to offer attractive promotional discounts

• Incentives such as interest free installment plans

• Waiver of annual subscription fees with minimum spending

• Ease of payment which facilitates utilization of credit cards

In summary the 21 to 29 year old age group showed significant increases in both billing and the usage of credit as a mode of payment. While there are many attributing factors present, the increase of credit payments was not reflective of overall consumer confidence index.

As reported on Channel News Asia on 10th November 2008, a survey polled over 26,000 people in 52 countries between September 23 and October 6 of 2008 showed that the consumer confidence index in Singapore had declined by 10 points to 92. When compared to a year ago the index was peaked at 114 points. 1

1 Source: Channel News Asia 10th Nov 2008 : http://www.channelnewsasia.com/stories/singaporelocalnews/view/391056/1/.html