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<p>Household debt in Singapore jumped to S$371.39 billion in July 2021.</p>



<p>That’s a sharp increase of nearly 8% from the previous month (S$343.82 billion).&nbsp;</p>



<p>Not only is this an unprecedented figure, but it’s also cause for concern. It might be a telltale sign that Singapore’s spending has become highly disproportionate to our earning power.</p>



<h3 id="h-singapore-household-debt-s-billion">Singapore Household Debt (S$ Billion)</h3>



<figure class="wp-block-image size-large"><img loading="lazy" width="1024" height="594" src="https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-household-debt-billions-1-1024x594.png" alt="" class="wp-image-946" srcset="https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-household-debt-billions-1-1024x594.png 1024w, https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-household-debt-billions-1-300x174.png 300w, https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-household-debt-billions-1-768x445.png 768w, https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-household-debt-billions-1.png 1280w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



<figure class="wp-block-table"><table class="has-fixed-layout"><thead><tr><th>Monthly</th><th>Singapore Household Debt (S$ billion)</th></tr></thead><tbody><tr><td>Jul 2021</td><td>S$371.39</td></tr><tr><td>Jun 2021</td><td>S$343.82</td></tr><tr><td>May 2021</td><td>S$345.95</td></tr><tr><td>Apr 2021</td><td>S$342.95</td></tr><tr><td>Mar 2021</td><td>S$338.42</td></tr><tr><td>Feb 2021</td><td>S$339.58</td></tr><tr><td>Jan 2021</td><td>S$338.61</td></tr><tr><td>Dec 2020</td><td>S$336.36</td></tr><tr><td>Nov 2020</td><td>S$330.26</td></tr><tr><td>Oct 2020</td><td>S$324.08</td></tr><tr><td>Sep 2020</td><td>S$321.80</td></tr><tr><td>Aug 2020</td><td>S$321.08</td></tr><tr><td>Jul 2020</td><td>S$317.03</td></tr><tr><td>Jun 2020</td><td>S$311.05</td></tr><tr><td>May 2020</td><td>S$306.69</td></tr><tr><td>Apr 2020</td><td>S$309.08</td></tr><tr><td>Mar 2020</td><td>S$312.02</td></tr><tr><td>Feb 2020</td><td>S$325.20</td></tr><tr><td>Jan 2020</td><td>S$329.28</td></tr><tr><td>Dec 2019</td><td>S$332.18</td></tr><tr><td>Nov 2019</td><td>S$327.97</td></tr><tr><td>Oct 2019</td><td>S$328.91</td></tr><tr><td>Sep 2019</td><td>S$323.61</td></tr><tr><td>Aug 2019</td><td>S$321.86</td></tr></tbody></table><figcaption>Source: CEIC Data</figcaption></figure>



<p>Let’s examine the numbers in greater detail, <strong>beginning with credit card debt.</strong></p>



<h2 id="h-credit-card-debt-tells-you-about-the-state-of-the-economy">Credit Card Debt Tells You About the State of the Economy</h2>



<p>Traditionally, <a href="https://www.straitstimes.com/business/economy/more-families-could-face-difficulty-with-home-loan-payments-though-overall" target="_blank" rel="noreferrer noopener nofollow"><strong>credit card debt</strong></a><strong> is the first sign of borrowers’ financial distress.</strong>&nbsp; If they miss paying their credit card bills, chances are that they might not be able to afford their home loans or other credit facilities.</p>



<p>An economic downturn, recession, and rising unemployment are typical scenarios that contribute to the rise of credit card debt.</p>



<p>Even though consumers in Singapore managed to keep credit card debt from escalating in 2020 despite the recession that arose out of the Covid-19 pandemic, this financial prudence seems to have stretched to a breaking point in 2021.</p>



<h2 id="h-credit-card-debt-dipped-in-2020-but-household-debt-began-rising">Credit Card Debt Dipped in 2020 — But Household Debt Began Rising</h2>



<p>According to the Monetary Authority of Singapore (MAS), in 2020 the total rollover credit card balances dipped 15.8% from 2019. That’s great for 2020 — but it didn’t last.</p>



<p>By mid-2021, the overall household debt increased by over 10% to reach S$371.39 billion in July.&nbsp; This could mean a few situations:</p>



<ul><li>Consumers may be taking on additional debt to put into investments</li><li>Consumer finances might have reached an unsustainable level due to depleting savings&nbsp;</li><li>Consumers diligently paid off their credit bills but other household debts might have gone awry</li><li>Declining income due to unemployment or reduced wages</li><li>Consumers might have exhausted the stimulus payouts from the government in 2020 to cushion them from recession and unemployment</li></ul>



<h2 id="h-are-consumers-spending-beyond-their-means">Are Consumers Spending Beyond Their Means?&nbsp;&nbsp;</h2>



<p>Over the period between 2015 to 2020, Singaporean households have been accumulating assets steadily. The growth can be observed in the chart below:</p>



<h3 id="h-household-assets-and-liabilities-2015-to-2020">Household Assets and Liabilities* – 2015 to 2020</h3>



<figure class="wp-block-image size-large"><img loading="lazy" width="1024" height="594" src="https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-assets-liabilities-2015-to-2020-1024x594.png" alt="" class="wp-image-947" srcset="https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-assets-liabilities-2015-to-2020-1024x594.png 1024w, https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-assets-liabilities-2015-to-2020-300x174.png 300w, https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-assets-liabilities-2015-to-2020-768x445.png 768w, https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-assets-liabilities-2015-to-2020.png 1280w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



<figure class="wp-block-table"><table><tbody><tr><td><strong>Year</strong></td><td><strong>Total Asset</strong></td><td><strong>Total Liability</strong></td><td><strong>Net Worth</strong></td></tr><tr><td>&nbsp;</td><td colspan="3"><strong>(S$ Billion)</strong></td></tr><tr><td>2015</td><td>1,832.8</td><td>301.5</td><td>1,531.3</td></tr><tr><td>2016</td><td>1942.5</td><td>309.3</td><td>1,633.3</td></tr><tr><td>2017</td><td>2,070.1</td><td>323.8</td><td>1,746.3</td></tr><tr><td>2018</td><td>2,163.3</td><td>328.1</td><td>1,835.2</td></tr><tr><td>2019</td><td>2,312.3</td><td>323.8</td><td>1,988.5</td></tr><tr><td>2020</td><td>2,469.8</td><td>318.4</td><td>2,151.4</td></tr></tbody></table></figure>



<p><strong>Data source: </strong><a href="https://www.singstat.gov.sg/publications/reference/singapore-in-figures/economy" target="_blank" rel="noreferrer noopener nofollow"><strong>Department of Statistics Singapore</strong></a></p>



<p><em>* Assets include financial and residential properties and liabilities are made up of personal and mortgage loans.&nbsp;&nbsp;</em></p>



<p>Even with the COVID-19 pandemic in 2020, total household assets continued to trend upwards. In the same year, household liabilities also dropped significantly after a three-year spike between 2017 to 2019.</p>



<p>Seemingly, <strong>Singaporean households are holding back on spending amidst the pandemic to ensure they can maintain a healthy net worth.</strong> The total household net worth even reached an all-time high in 2020, with a nearly 40% increase compared to 2015!</p>



<p>Research has also revealed that <strong>while nearly</strong><a href="https://sg.yougov.com/en-sg/news/2019/03/26/most-singaporeans-own-credit-cards-few-are-debt/" target="_blank" rel="noreferrer noopener nofollow"><strong> 73% of Singaporeans</strong></a><strong> own at least one credit card,&nbsp; credit card debt is considered low</strong>. Most consumers here are financially responsible and pay off their credit card bills on time.</p>



<h2 id="h-most-common-type-of-credit-card-debt">Most Common Type of Credit Card Debt</h2>



<p>Rolling over balances is one of the trickiest problems: it quickly snowballs into a bigger debt that cardholders don’t see coming. Given the convenience and perks of credit cards, cardholders might get a huge bill if they aren’t conscientious about making repayments.</p>



<p>Specifically, many people misunderstand how credit card interest rates are calculated. This interest rate is known as the Annual Percentage Rate (APR): it divides the annual percentage rate by 365, then multiplies the current balance by the daily rate. That amount is then added to your bill.</p>



<p><strong>Many people make the mistake of only paying off the minimum sum.</strong> This completely misses the fact that what they don’t pay off accumulates daily interest. With APR, a S$5,000 debt could easily <a href="https://www.dbs.com.sg/personal/articles/nav/budget-spend/debt-series-credit-cards" target="_blank" rel="noreferrer noopener nofollow">balloon to S$15,473</a>!</p>



<h2 id="h-overcoming-debts-with-savings">Overcoming Debts with Savings</h2>



<p>The data seems to indicate that Singaporean consumers are more financially prudent than the global average. Does this also imply that they’re much more prepared to save for retirement?</p>



<p><em>Read also: </em><a href="https://www.moneymate.sg/how-to-get-financial-independence-and-retire-early-fire-in-singapore">How to Get Financial Independence and Retire Early in Singapore</a></p>



<p>As a nation, Singapore has an estimated S$188.6 billion in Gross Domestic Savings. This is <a href="https://databank.worldbank.org/reports.aspx?source=2&amp;type=metadata&amp;series=NY.GDS.TOTL.ZS" target="_blank" rel="noreferrer noopener nofollow">54.57% of GDP</a>, putting Singapore among the richest countries in the world. It’s joined by countries like Luxembourg (54.4%), Ireland (61.2%) and Brunei (50.5%); even developed nations like Canada (20.1%), Japan (26.1%), and the United States (19%) reveal less promising figures.&nbsp;</p>



<p>What does healthy Gross Domestic Savings represent? It’s an indicator of a nation&#8217;s health based on savings, which eventually leads to investments. The collective spending behaviour of households, public entities, and private corporations affect the direction of the national savings rate.</p>



<p><strong>In other words:</strong> a healthy Gross Domestic Savings rate implies that Singaporeans are in a stable macro and microenvironment and able to acquire decent enough income for savings.</p>



<p>The Gross Domestic Savings rate for the past <a href="https://data.worldbank.org/indicator/NY.GDS.TOTL.ZS?end=2020&amp;locations=SG&amp;start=2000&amp;view=chart" target="_blank" rel="noreferrer noopener nofollow">20 years</a> also reveals that national household savings have been on the rise. This is in large part due to a stable economy and sound public policies.</p>



<h3 id="h-singapore-gross-domestic-savings-rate-2010-to-2020">Singapore Gross Domestic Savings Rate (%) – 2010 to 2020</h3>



<figure class="wp-block-image size-large"><img loading="lazy" width="1024" height="594" src="https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-gross-domestic-savings-rate-1024x594.png" alt="" class="wp-image-948" srcset="https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-gross-domestic-savings-rate-1024x594.png 1024w, https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-gross-domestic-savings-rate-300x174.png 300w, https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-gross-domestic-savings-rate-768x445.png 768w, https://www.moneymate.sg/wp-content/uploads/2021/10/singapore-gross-domestic-savings-rate.png 1280w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>


Average Credit Card Debt in Singapore [2021 Statistics]