The Singaporean Monetary Authority (MAS) brought changes to the regulation of unsecured loans. The changes species the amount of money an individual can now borrow. This new uncollateralized loan limit put in place by the Singaporean Monetary Authority does not favour many individuals.
No one likes living on credit but at times life situations may require you to come up with some urgent cash. Therefore, you end up needing financial assistance for several months. Your credit line or credit card may have been frozen owing to the newly set limit on unsecured loans. Here is where you can access urgent cash in Singapore.
The New Limit Of Unsecured Debt
As of June 1st, 2017, the Singaporean Monetary Authority has put in place a new limit. This limit defines how much of the unpaid debt you can have as an unsecured loan facility. This set limit applies to every one of the financial institutions (FIs) found in Singapore. The new limit will be imposed on you should your interest earning unsecured loan be more than 18 times your earning for each month. This is when the unsecured loan remains so for 3 following months.
When this occurs, you stand to lose any right to use credit facilities offered by financial institutions. Some institutions may also disallow you from acquiring new credit cards and credit card unsecured facilities. And also getting increases on the existing charge cards issued by them.
What An Interest-bearing Unsecured Debt Is
Interest-bearing unsecured credit is the amount of debt that attracts interest on the balance due. This amount is also not backed using any type of collateral for instance property.
- What It Includes
The unsecured interest-bearing debt is one charged on credit lines, credit cards, overdrafts and personal loan issued by the various financial institutions found in Singapore.
- What It Excludes
The interest earning debt excludes credit on the unsecured loans extended to you on a needs-basis and purpose. Such unsecured loans include medical, education and business loans.
- The Financial Institutions (FIs) Involved
The financial institutions involved include credit card issuer and banks found in Singapore.
What Will Happen When You Exceed The New Set Limit
When you go beyond the new set debt limit, you will no longer be able to perform the following transactions:
- You will not be able to apply for a new credit card.
- You will not have access to any new unsecured loan facility such as personal loan and credit line.
- You will not be able to apply for limit increases on your existing credit card.
- You will be able to apply for an increase in the already existing unsecured loan facility.
- You will be disallowed from making charges onto the on-hand credit card.
- You will also not be able to use your on-hand credit card to pay for recurring charges such as your utility bill.
- It will also not be possible for you to make cash withdrawals and issue cheques using your unsecured line of credit.
An Example To Help You Understand
For example, assuming your monthly income is S$3,000. We will also presuppose that this is the same figure the financial institutions have on your income data. Therefore 18x your earnings each month comes to $54,000. (That is to say, each month’s earning S$3,000 x 18). Assuming you hold three credit cards with HSBC, DBS, and Citibank. For the credit cards, you have an outstanding balance due of S$10,000 each. In addition, you hold two unsecured lines of credit with OCBD and UOB. And the credit lines you have a balance due of S$15,000 on each of the cards.
The interest-bearing of unpaid loan debt for all the 5 banks comes to a total of S$60,000. This amount you owe already goes beyond the set limit of 18x your monthly earnings. Given that the S$60k is not paid for the months of January, February and in March. When April comes to an end, all the five banks will suspend both your credit card and line of credit. This for you will mean you will not be able to do the different transactions. These transactions are outlined under “What Will Happen If You Exceed the New Set Limit”.
This will remain so until you are able to fulfil the below-listed conditions:
- You can lower the interest-bearing debt that carries no collateral to an amount below 18 times your monthly earnings.
- You present your most up to date wages document to the financial institution for a review of your credit.
- The bank uplifts the suspension on your credit cards and line of credit based on the results they have obtained from the credit review.
How My Total Interest-bearing Is Determined On The Unsecured Debt
The Singaporean credit bureaus often gather and maintain all credit information. This information regarding a person’s credit is often presented to the bureau by its members. Members of credit bureaus include credit card issuers, banks, and other financial money lending companies in Singapore. The bureaus then calculate the sum of all your outstanding balance due. This is got from the reports issued by their members. The report often lists all the debt you owe across both the unsecured and secured credit facilities.
The outstanding uncollateralized credit is further separated further into 2 parts. These 2 parts are non-interest bearing and interest-bearing debt. From this, the financial institutions only consider the interest-bearing unsecured credit. This will then help them establish your borrowing limit. You will then be able to access your credit report. And you can get it from DP Credit Bureau and the Singaporean Credit Bureau (CBS).
Where You Can Get Money If Your Credit Card Is Suspended
The Singaporean Monetary Authority set limits will end up suspending some individuals credit limits. Before you find yourself in such a predicament, you should talk to a licensed moneylender. A trusted and licensed moneylender will help you with a suitable loan before your debt escalates and snowball into a huge debt. The moneylenders will be able to offer you unsecured loan facility. The unsecured loan facility by a licensed moneylender attracts low-interest rates.
Don’t let yourself be in debt when there are means and ways to assist you to avoid getting yourself in trouble with money issues.