By Lorna Tan, Senior Correspondent

If you have developed the bad habit of rolling over your outstanding credit card bills instead of paying them in full, you have plenty of company in Singapore.

You would have contributed to the mind-boggling $3.68 billion in credit card debt chalked up by card users last year alone. Latest statistics show that this mountain of debt grew 9.5 per cent from 2008.

And do not blame all of the increase on new cards issued last year: They grew by a smaller 6.7 per cent.

So what are the likely causes of this crippling debt pile?

Ms Tan Huey Min, assistant director at Credit Counselling Singapore (CCS), attributed the spike to overspending as well as pay cuts and job losses as the recession bit hard. She said other reasons included gambling, medical bills and renovations.

In fact, last year was an unwanted 'record' year for CCS, which counselled nearly 1,300 people, almost double the 714 in 2008.

Based on CCS statistics, a typical debtor takes home $2,700 a month and owes about $70,000 to seven banks. That translates into two years and two months of his take- home pay.

According to Ms Tan, debtors can be classified broadly into four categories:

# Hard-luck cases: They are usually saddled with job-related woes and have been hit by pay cuts or retrenchment. This category includes those burdened with high medical expenses.

# Big spenders: These people spend beyond their means so that their monthly expenses exceed their monthly income.

Citibank noted that some customers adopt a 'sale' mentality. They buy lots of items at retail sales believing they are saving money. But they buy more than they can afford and pay only the minimum amount on their card each month.

'As such, their credit card balance continues to grow, along with their minimum amount payable. Meanwhile, they are being charged interest on the balance. If only the minimum payment is made on a significant balance, it can take years to pay off the full debt,' cautioned Citibank.

Since last July, the bank has been promoting responsible credit management through its 'Use Credit Wisely' programme.

# Muddle-headed people: These people might have given loans to others using their credit facilities, or started a business with credit cards or credit line facilities.

'If a person wants to 'help' a friend financially, it is advisable to use his own savings. If he doesn't have sufficient savings and still wants to (help), then perhaps he should calculate and ensure that he himself has the means to repay the borrowed sum,' said Ms Tan.

Those setting up a business should apply for a business loan or get a loan from relatives and friends. Few businesses will achieve a return that is more than the 24 per cent interest rate charged by credit cards.

Even if they do, the 24 per cent will only repay the interest, and not even the principal borrowed on the credit card, she added.

# Punters: These people love a bet through various means like soccer betting, casino, Toto and the 4-D lottery, or they speculate in shares.

Such debtors typically look only at the affordability of making the minimum monthly payment instead of the total outstanding debt.

'This illusion coupled with adverse income changes such as job loss and pay cuts, will trigger the debt problem and render it out of control,' she said.

1. Eight tips to use credit cards wisely

2. Questions to ask yourself

3. Tips for debtors

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