Homemakers, working-class struggle more with debt payments: study

Singapore consumers generally show good credit behaviour, but certain groups more than others have a harder time paying their debts, according to a recent study.

Unveiling a study on how nine consumer groups in Singapore manage their money and credit, DP Credit Bureau said on Tuesday that between a quarter to a third of consumers across nine segments have a high DP-Delphi Score, meaning they pay their debts in full and on time.

“This high percentage across all nine groups indicates that Singaporeans generally are very responsible users of credit,” the Singapore credit bureau said.

However, showing a low score were many consumers from three groups – “Working Class Traditionalists”, “Kopitiam Lifestyles” and “Contemporary Homemakers”. Found to be under greater financial stress, these consumers face a moderate to higher credit risk, said DP Credit Bureau.

Consumers in the “Cautious Community” group showed the best credit behaviour among all nine groups, the study showed.

In the “Affluent Elegance” and “Cosmopolitan Central” groups, about 41 and 34 per cent of households earn monthly incomes of at least S$8,000, respectively. Yet, the two groups have very different demographic profiles and credit behaviour.

The rate of default on unsecured credit products for “Cosmopolitan Central” stands at 2.7 per cent, four times more than the 0.8 per cent default rate of the “Affluent Elegance” group.

The study attributed this to the difference in behaviour of the high-income groups. Consumers who fall under “Cosmopolitan Central” are more likely to buy expensive consumer goods to live the lifestyle to which they aspire. They are also younger, independently ambitious, and more open to taking on credit.

The “Affluent Elegance” group, on the other hand, tends to be more stable in their consumption, having often accumulated their luxury and lifestyle items.

The demographic and geographic segmentation system, or the Experian Mosaic Singapore, classifies 98 per cent of Singapore households into groups which share similar demographic and socioeconomic characteristics, as well sharing the same habits and lifestyle preferences.

Said general manager of DP Credit Bureau Lincoln Teo, “It is now possible to provide greater segmentation and corresponding insight beyond traditional, single dimension variables such as age or gender.”