Did you know that 73% of Singaporeans own at least one credit card? It gives people the option to make purchases now and pay later. Plus, credit card users also enjoy the perks that come with it. This includes rewards points, cash rebates, and discounts in select stores and restaurants.
However, just like any other type of loan, it also has its downside. For one, some credit card lines have sky-high interest rates. And if you’re only paying the minimum amount, your credit card debt can snowball.
Are you struggling to pay off your credit card debt? You’ll need a strategy to consolidate your debt before it gets out of hand. Taking a personal loan with a lower interest rate will help make payments more manageable. Here are other ways to repay credit card debts.
4 Ways to Pay Off Credit Card Debts
This debt repayment plan involves transferring your existing debt to a new credit card with zero interest for an initial duration. This type of credit card will not charge any interest for a promotional period- usually 6 to 12 months.
For this plan to work, you’ll need to clear off your balances before the end of the promotional period. Any outstanding balance after the promotional period will be subjected to a regular credit card interest rate. Additionally, credit card issuers usually charge an administrative fee of around 3% to 6%. Some might also charge an annual fee.
That said, before choosing a balance transfer repayment plan, calculate how much you’ll be able to save over time.
Pros:
- Zero-interest for a promotional period, usually 6 to 12 months
- Higher chances of eligibility since you’re only applying for a credit card instead of a loan
Cons:
- You’ll need to pay an administrative fee
- Short repayment period
- A high interest rate will immediately kick in after the promotional period.
A personal line of credit is a type of personal loan. It is a revolving credit facility that provides you with access to extra cash when you need it. Interest is charged on the amount used.
This type of debt repayment plan gives you a lower interest rate as compared to your credit card. Plus, it offers a flexible repayment schedule. Think of it as a means to get instant cash in cases of emergency.
However, some issuers charge an administrative fee and an annual fee. In case of late repayment, you’ll also need to pay a late fee charge on top of interest charges.
Pros:
- Low interest rate using a credit card
- Flexible repayment period
- Access to quick, emergency cash
Cons:
- Higher interest rate than personal loans
- Some issuers charge an administrative fee and annual fee
One of the best ways to repay credit card debt in Singapore is through a personal loan. With a personal loan, you can choose the loan amount and loan period that suits your financial situation. Personal loans have lower interest rates than credit cards and have a fixed repayment period.
So how does this work?
First, you’ll take a personal loan from a bank or licensed moneylender. Pay off your credit card debt in full with the cash you’ll receive from the loan. However, you’ll need to commit to the monthly repayments.
Pros:
- Fixed interest rate
- Fixed monthly repayment and payment period
Cons:
- If you have a good credit score and high income, you’ll enjoy lower rates
- Some banks may charge a processing fee
A debt consolidation plan is a government-approved scheme. It is available in all leading banks in Singapore. This special type of personal loan is open for Singapore citizens and permanent residents who are deep in debt.
How do you qualify for a debt consolidation plan?
You’ll only qualify if you have several outstanding balances from unsecured loans and your debt is more than 12 times your monthly income. There are also other eligibility requirements such as your income.
Once approved, you’ll be given a revolving credit facility to provide you with a convenient way to pay for your daily essentials.
Pros:
- Fixed interest rate
- Fixed monthly payment as well as a fixed payment period
- Long payment period of up to 10 years
Cons:
- You’ll be unable to apply for other loans until you clear this loan
Banks and other financial institutions can approve or reject your DCP application.
Pros and Cons: Using Personal Loan for Debt Repayment
You can use a personal loan to repay your credit card debt in full. It’s relatively easy to do so. You’ll only have to apply for a personal loan then use the disbursed cash to pay off your credit card debt.
That said, using a personal loan to clear off your debt has its pros and cons.
Pros:
- Pay off your credit card debt in full
- You’ll only have to worry about one monthly payment instead of multiple credit card payments.
- You can compare different personal loans
- Personal loans have lower interest rate compared to credit cards
- Choose the interest rate and loan package that suits your needs and financial situation
- You can borrow a minimum of $1,000
- Flexible repayment schedule between 1 year to 7 years
- Your monthly payment is fixed so you can easily set aside money for it.
- Lower your credit utilization rate since you’re paying down your debt
Cons:
- A bad credit score or low income may make it hard to qualify for a personal loan
- Additionally, your credit history and income will affect your interest rate.
- You’ll need to commit to paying off your monthly repayments and avoid taking out additional loans
- Banks and licensed moneylenders may charge additional fees such as administrative fees.
- It could lead to more debt.
- If you have an underlying debt problem, it will not be addressed.
Best Personal Loans for Credit Card Debt in Singapore
When choosing a personal loan plan to pay off your credit card bills, you need to take into account your credit score. This factor will affect your interest rate. On top of that, certain banks like DBS or POSB quote different interest rates depending on the borrower’s profile.
HSBC Personal Loan
|
Interest Rate |
Minimum Loan Amount |
Processing Fee |
|---|---|---|
|
3.4% |
$5,000 |
$0 |
HSBC offers the longest loan tenure in Singapore – up to 7 years! Additionally, HSBC’s personal loan interest rate is one of the lowest in Singapore. Lastly, the minimum loan amount is $5,000. However, it can take up to 5 days to get approved.
Eligibility:
- Citizenship Status: Singaporean / PR
- Age: 21 – 65 years old
- Employment Status: Salaried Employee, Variable/Commission-based Employees, or Self Employed
- Minimum Annual Income: $30,000
Standard Chartered CashOne
|
Interest Rate |
Minimum Loan Amount |
Processing Fee |
|---|---|---|
|
3.48% |
$1,000 |
$0 |
Standard Chartered offers instant loan approval and cash disbursement within 15 minutes!
With a 3.48% interest rate, it is one of the cheapest personal loan plans in Singapore. Additionally, the processing fee is waived. The minimum loan amount is $1,000.
Eligibility:
- Citizenship Status: Singaporean / PR
- Age: 21 – 65 years old
- Employment Status: Salaried Employee, Variable/Commission-based Employees, or Self Employed
- Minimum Annual Income: $20,000
Citibank Quick Cash (New Loan Customers)
|
Interest Rate |
Minimum Loan Amount |
Processing Fee |
|---|---|---|
|
3.99% |
$1,000 |
$0 |
Citibank is currently offering a promotional rate of 3.99% p.a. for a minimum of $20,000 loan and at least 3 years’ tenure.
Can I borrow a lesser amount? Yes, you can! Pay it off in less than 3 years. In doing so, you’ll end up paying less interest in the long run. That said, avoid borrowing more than what you need.
Eligibility:
- Citizenship Status: Singaporean / PR
- Age: 21 – 65 years old
- Employment Status: Salaried Employee, Variable/Commission-based Employees, or Self Employed
- Minimum Annual Income for Singaporeans / PRs: $30,000
- Minimum Annual Income for Foreigners: $42,000
Note: You’ll need to apply for a Citibank deposit account when you apply for a personal loan.
Citibank 0% Interest Personal Loan (1-Year Tenure)
|
Interest Rate |
Minimum Loan Amount |
Processing Fee |
|---|---|---|
|
0% |
$1,000 |
3.5% |
If you want to borrow a small amount and you’re confident that you can repay it within a year, then this is a good option.
Currently, Citibank is offering a 0% interest rate personal loan for new customers. However, you’ll need to pay an upfront processing fee of 3.5%. So take this into account when deciding how much you’re going to borrow.
Eligibility:
- Citizenship Status: Singaporean / PR
- Age: 21 – 65 years old
- Employment Status: Salaried Employee, Variable/Commission-based Employees, or Self Employed
- Minimum Annual Income for Singaporeans / PRs: $30,000
- Minimum Annual Income for Foreigners: $42,000
Standard Chartered 0% Interest Personal Loan (1-Year Tenure)
|
Interest Rate |
Processing Fee |
|---|---|
|
0% |
4.5% |
This is another option you can consider when choosing a zero percent interest rate personal loan. You’ll need to pay an upfront 4.5% processing fee – higher than that of Citibank’s.
What makes Standard Chartered different from Citibank is that the income requirement is much lower. Singaporeans or permanent residents only need to have a minimum income of $20,000. Plus, you can borrow up to 4x your monthly salary, subject to a max loan amount of S$250,000.
Eligibility:
- Citizenship Status: Singaporean / PR
- Age: 21 – 65 years old
- Employment Status: Salaried Employee, Variable/Commission-based Employees, or Self Employed
- Minimum Annual Income for Singaporeans / PRs: $20,000
- Minimum Annual Income for Foreigners: $60,000
Why Is It Important To Clear Credit Card Debts Amid Pandemic
Just like any country in the world, different sectors of Singapore’s economy also suffered from the repercussions of COVID-19. Many Singaporeans suffered from wage cuts and unemployment. That said, some Singaporeans turned to debt to tide through this challenging time.
Although the government offered assistance, we must still take necessary steps to be more financially responsible. One way to do that is to prevent your debt from snowballing. Clear off your credit card bills amid pandemic. Here’s why:
To Prevent Your Debt From Getting Out Of Control
Credit cards are known for their high interest rates. In fact, it can range between 25% and 28% p.a. On top of that, late payment can lead to late fees as well as a late interest rate. Failing to pay off your credit card bills can cause your debt to snowball.
For example, an outstanding balance of $3,000 can become more than $3,750 by the end of the year. You’ll be paying a hefty amount of $750 just because you failed to pay your credit card debt on time.
To Maintain A Good Credit Score
Another reason to clear off your credit card debts is to maintain a good credit score. Financial institutions, like banks, will take your credit score into account when you apply for different types of loans. A good credit score will help you get the best loan deals.
So how do you keep a good credit score?
Pay your credit card bills on time. Late payments and defaulting on your loans can negatively impact your credit score. Additionally, a bad credit score may affect your employment chances. Some employers who will include your credit score when doing a background check.
To Lessen Your Worries
COVID-19 has affected everyone around the world. Unemployment is rising, wages are being cut, and confirmed cases of COVID-19 are still adding up. All these worries can take a toll on an individual’s mental health.
So don’t let spiraling debt add to your problems. Knowing that you don’t have debt can help you have peace of mind.
To Protect Your Family From Financial Strain
Clearing off your debt will not only boost your mental health but will also keep your family from suffering from financial strain. Don’t let credit card debt tear you apart. So make sure to repay your debts before it snowballs. For instance, you can cancel unused credit cards or make it a habit to pay off your credit card debt in full before its due date.
Additionally, you’ll also need to have an emergency fund. You never know when an emergency is going to happen. It’s best to have enough saved up to avoid acquiring more debt.
Conclusion
Responsible use of credit cards will help you get the most out of your purchases. You can gain benefits like points and cashbacks. Plus, you can enjoy both online and in-store shopping without needing cash. However, failing to repay your credit card bills can lead to serious debt.
If you’re struggling to pay off your credit card debt, you have plenty of options to repay your outstanding balances. Aside from banks, you can also take out a personal loan from licensed moneylenders. Bugis Credit Pte Ltd is one of the most reputable licensed moneylenders in Singapore. They offer the best personal loan with up to six times your monthly income at a very reasonable interest rate.
Lastly, to help you address underlying debt issues, you can turn to a credit counselor. Credit Counseling Singapore (CCS Singapore) can help you manage your credit debt. They provide expert advice as well as provide resources to help you become debt-free.
