Credit card spending in Singapore is expected to continue to rise in 2023, despite concerns over increasing debt, reports The Straits Times. Market players observed the following trends:
- Spending was up 30 percent in 2022 compared to 2019: Citibank Singapore.
- Spending on transport and online shopping grew by 40 and 20 percent respectively: DBS.
- 60 percent of credit card spending were made by individuals aged 31-50, who typically make big purchases such as home-related expenses and children’s education: OCBC.
However, with the economy slowing down and interest rates at their highest in years, there are worries about the potential impact of credit card debt.
Using credit cards as part of retirement planning may not seem like an obvious choice, but it can be a feasible option for those who are financially responsible and able to manage their credit cards wisely.
Credit cards can provide several benefits that can help with retirement planning, such as cash-back rewards, travel benefits, and purchase protections.
Cashback rewards can be particularly useful for retirement planning. Many credit cards offer cash-back rewards on everyday purchases, such as groceries, gas, and dining out. These rewards can add up over time and can be used to supplement retirement income or even build up a retirement savings account.
Travel benefits can also be helpful for retirees who want to explore the world. Some credit cards offer travel rewards and perks, such as airline miles and hotel discounts, which can make travel more affordable. Additionally, some credit cards offer travel insurance and other protections that can provide peace of mind when traveling.
Purchase protection can also be useful for retirees who may be more vulnerable to scams or fraudulent activity. Credit cards often offer protection against fraudulent charges and can provide assistance if a product or service purchased with the card is defective or not as advertised. This can help protect retirees from financial losses and give them added confidence when making purchases.
Of course, using credit cards as part of retirement planning requires financial responsibility and discipline. Retirees must be able to manage their credit cards wisely, paying off balances in full each month and avoiding high interest rates and fees. It is also important to keep track of spending and stay within a budget to avoid overspending or falling into debt.
In addition to using credit cards for cash back rewards, travel benefits, and purchase protections, retirees can also use credit cards to build and maintain their creditscores. A good credit score can be important for accessing loans, mortgages, and other financial products in retirement. By using credit cards responsibly and paying bills on time, retirees can help build and maintain their credit scores for the future.
Final words: using credit cards as part of retirement planning can be a feasible option for financially responsible retirees who are able to manage their credit cards wisely. Cash back rewards, travel benefits, purchase protections, and the ability to build and maintain credit scores can all be useful for retirement planning. However, it is important to use credit cards responsibly and avoid high interestrates and fees. By doing so, retirees can enjoy the benefits of credit cards while still meeting their retirement goals.
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Consumer credit card spend often serves as a barometer of consumer confidence in the state of the economy. The healthy growth balanced with controlled indebtedness as evidenced by the market players including OCBC augurs a generally positive outlook for our economy.
Credit to our financial regulator’s prescient measure of the progressive implementation of the balance-to-income (BTI) between 2015 and 2019, BTI has proven to be a most effective check against unbridled growth of consumer unsecured debt in Singapore and guardrail to facilitate the balanced growth of consumer credit.
Earlier this month, I shared with Khieng Yuit Chor some observations about credit card spend. Since the pandemic, credit card spend has been on the rise every year. In 2022, the amount of money our customers spent on their credit cards increased by 16% year-on-year. Unsurprisingly, about 60% of total credit card spend were made by those aged 31-50, a demographic traditionally associated with expense-heavy demands such as home-related purchases and education for their children.
The top 3 most common spend categories in 2022 were dining, groceries and insurance, which made up 35% of the total credit card expenditure. Interestingly, there had been a 25% year-on-year growth in card spend on fast food restaurants since 2021.
We expect credit card spend to continue growing as people seek a return to their pre-pandemic lives, with the resumption of global travel and the trend of revenge spending.