Drowning in multiple loan payments? Feeling trapped by high-interest debt? Debt consolidation could be your lifeline—helping you streamline payments, lower interest rates, and regain control of your finances. But is it the right move for you?
From traditional bank loans to flexible options offered by licensed moneylenders, there are multiple paths to financial relief. The key is finding the right fit for your situation.
Before making a decision, it’s crucial to understand how debt consolidation works, its potential risks, and whether it can truly ease your financial burden. Let’s dive in.
What is Debt Consolidation?
A Debt Consolidation Plan works by combining multiple unsecured debts, such as credit card balances, personal loans, and education loans, into a single loan with a structured repayment plan. This strategy can simplify finances, reduce the number of monthly payments, and potentially secure a lower interest rate, making debt repayment more manageable.
This process can be done through various methods, including debt consolidation loans, balance transfer credit cards, or structured debt refinancing programs offered by multiple financial institutions. For those who may not qualify for traditional loans, licensed moneylenders can provide alternative solutions.
Major Banks in Singapore With the Best Debt Consolidation Plans
Debt consolidation can help you manage your debts more effectively. There are different options you can consider.
At a glance:
| Bank | Interest Rate (p.a.) | Loan Tenure | Cash Rebates/Promotions | Minimum Annual Income |
| OCBC | 4.50% (EIR 8.06% – 8.41%) | 36 to 96 months | No | S$30,000 |
| HSBC | From 4.5% (EIR 8.0%) | 1 to 10 years | 5% Cashback on Refinance | S$30,000 (Salaried) / S$40,000 (Self-Employed) |
| CIMB | From 2.77% | Up to 60 months | No | S$30,000 |
| DBS | 3.58% (EIR 6.56%) | Up to 8 years | No | S$30,000 |
| Maybank | From 3.48% (EIR 6.26%) | Up to 10 years | Up to 5% Cash Rebate + S$1,500 for New DCP | S$30,000 |
1. OCBC Debt Consolidation Plan
The OCBC Debt Consolidation Plan helps you combine multiple credit card and personal loan balances into a single fixed monthly repayment with a lower interest rate. This plan simplifies your finances, reduces interest charges, and provides structured repayment terms, making it easier to stay on track with debt repayment.
Key Features:
- Applied interest rate of 4.50% per annum with an Effective Interest Rate (EIR) ranging from 8.06% to 8.41% per annum, depending on the repayment period.
- Choose repayment periods from 36 to 96 months to suit your financial needs.
- Receive an OCBC Platinum Credit Card with a credit limit of 1x your monthly income, with no annual fee, for everyday expenses.
Eligibility Requirements:
- Minimum 21 years old.
- Singaporeans and Singapore PRs.
- Between S$30,000 and S$120,000.
- Balance-to-Income (BTI) — At least 12x your monthly income
2. HSBC Debt Consolidation Plan
The HSBC Debt Consolidation Plan is designed to help individuals simplify their loan repayments by consolidating multiple unsecured debts into a single fixed monthly repayment. With repayment terms of up to 10 years and interest rates starting from 4.5% p.a. (EIR from 8.0% p.a.), this plan offers a structured way to regain financial control. It also comes with a complimentary HSBC Visa Platinum credit card for daily financial needs.
Key Features:
- Choose repayment periods ranging from 1 to 10 years to match your financial needs.
- Get a revolving credit facility for daily expenses with potential savings on transactions.
- Enjoy cashback when refinancing an existing Debt Consolidation Plan with HSBC.
Eligibility Requirements:
- Singaporean or Singapore Permanent Resident (PR).
- Salaried employees: Between SGD30,000 and SGD119,999; Self-employed or commission-based earners: Between SGD40,000 and SGD119,999.
- Total interest-bearing balances on unsecured credit facilities must exceed 12 times your monthly income.
3. CIMB Debt Consolidation Plan
The CIMB Debt Consolidation Plan allows you to merge your unsecured credit facilities across multiple banks into a single fixed installment plan with interest rates starting from as low as 2.77% p.a. This plan offers affordable repayment options with a tenure of up to 60 months, helping you take control of your finances and reduce your overall debt burden.
Key Features:
- CIMB will settle all your interest-bearing unsecured balances across banks, including CIMB.
- Choose a repayment period of up to 60 months to fit your budget.
- Get a higher credit limit to manage your finances effectively.
Eligibility Requirements:
- Singaporean or Singapore Permanent Resident (PR).
- Minimum annual income of S$30,000.
4. DBS Debt Consolidation Plan
The DBS Debt Consolidation Plan helps you take control of your debts by combining multiple credit balances into a single, manageable loan with lower interest rates. For a limited time, enjoy an interest rate of 3.58% p.a. (EIR 6.56% p.a.), along with flexible repayment terms of up to 8 years. This plan is designed to help you reduce interest payments, simplify your finances, and achieve a stress-free financial future.
Key Features:
- Enjoy a promotional rate of 3.58% p.a. (EIR 6.56% p.a.), significantly reducing interest costs.
- Choose repayment terms of up to 8 years to better manage your finances.
- Get a credit card with a limit of 1x your monthly income and no annual fees for everyday expenses.
Eligibility Requirements:
- Singaporean or Singapore Permanent Resident (PR).
- Between 21 to 65 years old (upon loan maturity).
- Annual income between S$30,000 and < S$120,000.
- Balance-to-Income Ratio (BTI) of more than 12 times monthly income.
5. Maybank Debt Consolidation Plan
The Maybank Debt Consolidation Plan (DCP) helps you simplify your finances by combining multiple credit card and credit line balances into one fixed monthly repayment. Enjoy a lower interest rate starting from 3.48% p.a. (EIR 6.26% p.a.), and take advantage of exclusive cash rebate promotions when you apply. With flexible repayment terms of up to 10 years, this plan makes it easier to manage your debt and regain financial stability.
Key Features:
- Choose a repayment period of up to 10 years for more manageable installments.
- Get a credit limit of 1x your monthly income for daily expenses.
- Cash Rebates for New & Refinanced DCPs – New DCP Applicants: Receive S$1,500 cash rebate; Refinancing DCP: Get S$288 + up to 5% cash rebate.
Eligibility Requirements:
- 21 years old and above.
- Singapore Citizen or Singapore Permanent Resident (PR).
- S$30,000 to S$120,000.
- Total interest-bearing unsecured debt across financial institutions must exceed 12 times your monthly income.
Note: The information provided above is for general reference only. Interest rates, eligibility criteria, repayment terms, and promotional offers may change at any time at the bank’s discretion.
How is a Debt Consolidation Plan Useful?
A Debt Consolidation Plan (DCP) helps individuals manage multiple debts by combining them into a single loan with a fixed monthly repayment. This can reduce financial stress, lower interest rates, and simplify budgeting. Instead of tracking multiple credit card bills and personal loans with different due dates and interest rates, you only need to focus on one repayment plan.
Key Benefits of a Debt Consolidation Plan:
- Lower Interest Rates: Most DCPs offer lower interest rates compared to high-interest credit cards or unsecured loans, helping you save money.
- Simplified Repayments: Instead of managing multiple debts, you make a single, structured repayment each month.
- Fixed Loan Tenure: With a fixed repayment period (e.g., 3 to 10 years), you have a clear timeline for becoming debt-free.
- Better Financial Planning: A fixed monthly installment makes it easier to budget and avoid late payment penalties.
- Prevents Debt from Growing: Since credit card debts often have high revolving interest rates, consolidating them into a structured loan prevents debt from spiraling out of control.
To illustrate how a Debt Consolidation Plan can be useful, let’s compare someone with multiple credit card debts to the same person after consolidating them into a DCP with a lower interest rate.
| Scenario | Without Debt Consolidation | With Debt Consolidation Plan |
| Total Debt | S$30,000 (spread across 3 credit cards) | S$30,000 (consolidated into 1 loan) |
| Average Interest Rate | 25% p.a. (on credit cards) | 4.5% p.a. (DCP loan rate) |
| Monthly Payment | S$1,200 (varies due to interest compounding) | S$625 (fixed installment) |
| Time to Pay Off Debt | Uncertain (depends on how much is paid monthly) | 5 years (if choosing a 5-year tenure) |
| Risk of Late Payments | High (multiple due dates) | Low (single monthly payment) |
| Savings on Interest | Pays over S$10,000+ in interest | Saves S$6,000+ in interest costs |
As seen in the table, a DCP can lower the monthly repayment and significantly reduce interest expenses, helping borrowers pay off debt faster and more efficiently.
Risks and Considerations
A Debt Consolidation Plan (DCP) can simplify repayments, but it comes with potential risks that must be carefully considered.
- Credit Score Impact: Banks review your latest Credit Bureau Report when assessing your eligibility for a DCP. Applying for a DCP may temporarily lower your credit score, and missed payments can cause lasting damage.
- Higher Total Interest Costs: Longer loan tenures may reduce monthly payments but increase overall interest paid.
- Risk of New Debt: Without financial discipline, borrowers may continue using credit cards, leading to further debt accumulation.
- Loss of Credit Access: Existing unsecured credit facilities will be closed, limiting financial flexibility.
- Fees & Penalties: Late payments incur heavy penalties, and early loan termination often comes with a 5% outstanding balance fee.
- Collateral Risk (If Secured): Using secured loans (e.g., home equity) for debt consolidation may put assets at risk if repayments are missed.
Alternatives to Debt Consolidation
If a Debt Consolidation Plan (DCP) isn’t the right fit for you, there are other ways to manage and reduce debt. Consider these alternatives:
1. Debt Settlement
- Negotiate with creditors to reduce the total amount owed in exchange for a lump-sum payment.
- Can result in significant savings, but may negatively impact your credit score.
2. Balance Transfer Credit Cards
- Transfer high-interest debt to a 0% or low-interest balance transfer card for a promotional period.
- Best for short-term debt repayment but requires paying off the balance before interest rates increase.
3. Debt Management Plan (DMP)
- A structured plan managed by credit counseling agencies to lower interest rates and create a manageable repayment schedule.
- Unlike a DCP, existing credit facilities are not closed, allowing some financial flexibility.
4. Refinancing Personal Loans
- Taking a lower-interest personal loan to pay off higher-interest debts.
- Suitable for those with good credit scores who qualify for favorable loan terms.
5. Self-Managed Repayment Plan
- Prioritize debts using the avalanche method (paying off high-interest debts first) or snowball method (paying off smaller debts first for motivation).
- Requires strict budgeting and discipline but avoids additional loan commitments.
6. Bankruptcy (Last Resort)
- Legal protection from creditors but comes with severe credit consequences and may require asset liquidation.
- Only advisable when all other options are exhausted.
Each alternative has pros and cons depending on your financial situation. Evaluate interest rates, repayment terms, and long-term impact before deciding on the best debt relief strategy.
Final Word
A debt consolidation plan can be a powerful financial tool to simplify debt repayment, reduce interest costs, and provide a clear path to becoming debt-free. However, it requires careful financial planning, discipline, and commitment to avoid accumulating new debt. Always compare different DCP options, consider alternative solutions, and choose the strategy that best fits your financial situation.
Key Takeaways:
- OCBC, HSBC, CIMB, DBS, and Maybank offer competitive DCPs with varying interest rates and repayment terms.
- Lower interest rates on a DCP can save thousands in interest costs compared to high-interest credit cards.
- Debt consolidation is effective only if paired with responsible spending habits and a commitment to debt repayment.
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