I read with interest on the article titled "Younger Singaporeans biggest debt defaulters" posted on Channel NewsAsia. This article talks about percentage of default for the age group ranging from 21-29 years old has the highest rate of defaults among the other age groups.

This is the age group where most of them have just graduated and are heading to the working force. It is at this stage they suddenly have much more disposable income to spend on as compared to before thus they may not have experience in dealing with credit cards and doing budgeting. Besides, they may not be well informed in the area of personal finance and it is not a wonder that this group may be the most susceptible to the ills of credit cards usage. Here are some opinions of mine regarding the usage of credit cards.

1. Spend only what you have

As the title suggest, it means that one should not even own a credit card. Otherwise, one can stick to using a debit card instead, which means that one only spend within their means. Well, it may not be reasonably practical to refrain from using a credit card since nowadays, credit cards come with a lot of privileges and perks which may save you money such as discounts at restaurants and shops, reward points and other promotions. In that case, that will bring me to my next point.

2. Pay off all outstanding balance in full
The killer here is the exorbitant interest rates which cause many to default on their debts once they are unable to keep up with the interest payments. Generally, the interest rate is around 2% monthly or 24% yearly on the outstanding balance and that is very hefty. As such, make it a point to always pay off the outstanding balance and do not let the banks earn any interest at all.

In the event that you are not able to keep up your credit card debts and the outstanding balance is beginning to snowball, do not use another credit card to pay off the debts of another credit card. Try to seek help immediately from your loved ones or friends since frankly speaking, loans from them usually carry no interest. In this sense, you are changing your debtors from the banks to that of your loved ones, who are more likely to help you out.

Otherwise, you can give the Credit Counseling Singapore here. I believe they can work out a practical debt payment plan with the banks and can also try to negotiate for a lower interest rate, which will be helpful in solving your credit card debts.