Cashless Rise Leads to Overspending and Debt in Singapore
Overspending with cashless payments, especially among the younger generations, has become a concern in Singapore as more people have been using cards and e-wallets during the pandemic.
Use of non-cash options has risen more than 60 percent among the 18–35s over the past year. The Straits Times reports this age group in particular is also suffering from an increase in overspending that brings short-term problems such as spiralling debt, mid-term issues including stress, depression and other health issues, and longer-term consequences that could damage people’s prospects of building sound insurance plans or retirement nest eggs.
If people cannot insure themselves against bad outcomes like the pandemic, which has caused significant job losses, it is society and the government that have to bear health and livelihood costs.
The Straits Times spoke to young people struggling with debt to understand how it happened and the adverse effects it’s having on their lives. One—who wished to be identified only as V. Ho—soon got into trouble when they started using debit cards and NETS (Singapore’s Network for Electronic Transfers).
While initially careful with their spending—tracking it using budgeting apps—V. Ho found it difficult to keep up good habits, and within weeks barely had enough money for travel, skipping meals in order to make ends meet.
It was such a hassle to keep track of every payment I made online or using the cards. I ended up just estimating, and eventually overestimated by account balance.
Several studies have explored the tendency to spend more, and make less healthy purchase options when paying cashless as opposed to using cash. Ang Swee Hoon, Associate Professor of Marketing, NUS Business School, sums up the commonly cited issue of ‘no pain’ when tapping a screen or waving a card instead of handing over notes and coins, never to see them again.
By not seeing the cash being spent, consumers tend to underestimate their expenditure. [They feel] less pain on the pocket.
The rise in auto-renewal subscriptions—such as Netflix and Spotify—and online shopping with its convenient ‘one-click checkout’ have also been identified as overspending risks, alongside an increase in buy-now-pay-later options.