The issuance of supplementary credit cards

In Singapore, with credit cards offering an increasing number of perks, one might think cardholders would be more likely to share these privileges with their loved ones with a supplementary card. In fact, the ratio of principal to supplementary cards is dropping.

As of March 2005, there were over 946,000 supplementary credit cards issued in Singapore. That's only 24% of the total number of 3.95 million cards in issue. This compares to 34% (495,344 supplementary cards versus 1.47 million cards) 10 years ago, showing a 29% drop in the likelihood that a principal cardholder will request to have a supplementary card.

This gradual downtrend from a decade ago could be partly attributed to the rapid growth in principal credit cards owing to aggressive marketing by card issuing banks and the plethora of co-branded cards. All this has boosted main card holdings to an estimated four per eligible consumer.

Furthermore, as the general public becomes more educated on their liabilities and after hearing disturbing stories of supplementary card troubles, at a time when most banks still do not offer the option of setting a different spending limit, there is a tendency to be cautious about applying for a supplementary card.

The introduction of international debit cards under the Visa and MasterCard brands has also opened up certain card-related privileges and conveniences to non-credit qualified consumers. With other alternatives in the market, supplementary credit cards may not be as sought after. For those who are thinking of surprising a loved one with a supplementary card, there are some points to note so that you're not the one landed with the surprise.

Consolidated and separate statements: Apart from consolidated statements that detail each card's expenditure, some banks allow you to request separate statements for each cardholder, with an option to send to different addresses. This allows for easier dissemination of bills, should each party be handling their own payment.

Cash facilities: If your intention is just to allow your supplementary cardholders the convenience of purchasing with a card, you should note that they are also allowed to withdraw cash from ATMs. Some banks allow them to sign up for third party balance transfers from their own accounts to enjoy low interest rates. As these services often come with fees, it is often good to educate your supplementary cardholder about the fees incurred beforehand.

In the fine print of all credit card applications, it states that the basic cardholder is responsible for all liabilities which may be incurred by supplementary cards issued at his request.

Before taking on a supplementary cardholder, take some time to think about the ramifications. Ultimately, it boils down to the trust accorded to the person in question.

Even so, there is no harm in taking extra steps to prevent any mishaps from occurring.

Check statements: It is always in your interest to check your monthly statements against your sales invoices, including those for your supplementary card(s) to monitor your spending and question any suspicious transactions.

Lower the credit limit: To ensure that your supplementary cardholder only utilises the card within a limit you are comfortable with, you may set a lower credit limit on the particular card. This prevents them from using your account up to your own limit. But not all banks offer this service.

Trust is the main factor. For example, Mrs B is a consumer who trusts her maid with a supplementary credit card for grocery shopping. When her friends reacted with scepticism, she pointed out that she already entrusts her children with the maid, and nothing can be more valuable than that. 'After all, the credit limit I accorded to her card was only $1,000. I feel that the convenience it gives far outweighs the risk,' she says.

But in another instance, too much trust backfired on the card holder. Ms A trusted her boyfriend completely. Because of his lower income which did not let him hold a personal credit card, she had chosen to give him a supplementary card from her own account. She did not even check her statements, trusting that he would pay up what he owed every month. But one day when the couple broke up, she realised he had fully utilised her credit limit, leaving her to settle the bills.

To sum up, the supplementary card is a useful item that allows a great deal of convenience. Choose an issuer that is best able to suit your needs, cap your risk exposure and you should avoid any unpleasant surprises.