When your credit line or credit line is ‘frozen’ owing to the newly set limit on unsecured debt. Here are some sources where you can find some cash in Singapore.
Usually no one likes to survive on credit, however, sometimes life occurrences and circumstances can turn out different than planned. This means you will end up seeking financial assistance for several more months.
With new uncollateralized credit limit, placed by the Singaporean Monetary Authority (MAS), it could dash your expectations.
The New Set Limit On Unsecured Debt
From the beginning of June 2017, the Singaporean Monetary Authority put in place a new credit cap. This new limit specifies the amount of outstanding credit that you may have on an unsecured loan facility. The set limit affects each one of Singapore’s financial Institutions (FIs).
This new credit limit will be imposed on borrowers, this is if their interest rate bearing unsecured loan goes above 18 times the monthly salary. This is when the unsecured loan remains so for three successive months.
When this is the case, a borrower will risk losing the right to utilize their credit facilities. Particularly those loans facilities provided by financial institutions in the country. Some institutions also will not allow you to get new credit cards, which will also include the credit card for the uncollateralized facilities. This is also together with receiving increments on the present charge cards offered by them.
What Interest-Bearing Unsecured Credits Are
A fixed charge on unsecured credit is the amount of debt that incurs interest on its reducing balance. This loan amount is usually not secured by any form of collateral. A good example is property.
The unsecured interest-incurring loans are like those charged on credit lines, on overdrafts, personal loans, and credit cards. These credit facilities are provided by different financial institutions available in Singapore.
It Leaves out
It is the interest earning debt with the exception of credit on unsecured loans provided to you based on your needs and loan purpose. Some examples of the unsecured loans are business, medical, and education loans.
Involved Financial Institutions
Some of the financial institutions involved include banks, moneylenders and credit card issuers available in Singapore.
What Happens When I Go Past The New Set Limit
In case you exceed the set limit, you will no longer be able to do the following:
- Request for a new unsecured loan facility (for instance personal loan or line of credit)
- Request for a new card
- Apply for an increase on an existing card limit
- Apply for a limit increase on your existing unsecured loan facility
- Billing to your existing card
- Settle recurring charges like utility bill using the existing credit card
- Issue cheques or withdraw cash from your unsecured line of credit
What Example Can You Give Me
Given that your salary for each month totals S$3,000, and also assuming that the same income data is what Financial Institutions have about you. Therefore 18 times of your monthly salary will total S$54,000 (i.e. S$3,000 x 18).
When you hold three credit cards issued by DBS, Citibank, and HSBC that have outstanding balances amounting to S$10,000 for each. In addition, you hold 2 unsecured credit lines with OCBC and UOB with existing debt adding up to S$15,000 on each. The interest-bearing outstanding debt across the 5 banks totals S$60,000. This amount has already gone past 18 times of the monthly income.
Also, the S$60k stays unsettled for the months of January, February and even March. Thus by end of April, all the five banks will get the unsecured credit line and also the credit card suspended.
This will mean that you are not able to do those things mentioned under “What Happens When I Go Past The New Set Limit?” but only until you fulfill the conditions below:
- Present the latest salary document/s to your banks for a credit review
- Reduce your interest-bearing with no collateral debt to under 18x of the monthly earnings
- Banks call off the suspension depending on the results of the credit review
How To Determine The Total Interest-Earning Unsecured Loan
In Singapore, credit bureaus will collect and maintain every individual credit data presented by their members. The FI members are credit card providers, banks, money lenders and financial companies.
The credit bureaus will add up your existing debt as reported by the bureau members. This consists of any debt across both the unsecured and secured credit facilities you hold. In addition, they will separate further the un-collateralized debt into 2 components. These are interest-bearing debts and non-interest bearing debts.
From this information, the Financial Organizations ( FIs ) will only consider the interest-bearing unsecured loans as they attempt to establish your lending limit.
You may gain access to your report at DP Credit Bureau and Credit Bureau Singapore.
What Happens if My Credit Card Gets Suspended?
When you find yourself in circumstances of your credit card being suspended because of the new MAS unsecured credit rules. You may consider visiting a licensed moneylender near you. Choose to deal with a trustworthy licensed moneylender, who can assist you manage with unsecured loans which come at low rates of interest.
Therefore, carry out thorough research as you search for a suited licensed lender. Doing this will help you find the right lender near you. The information you gather during research will be helpful since you can choose the most trustworthy moneylender.
Ensure that you only work with a moneylender who is ready to meet your conditions and terms. Avoid signing any loan contracts until you are entirely contented with the set conditions. In addition, read through the terms of the personal loan that you will be borrowing.
While you carry out your research, make sure that you make decisions based on that search. In doing so, you will be able to locate the suitable and reliable licensed moneylender. The licensed moneylender you decide on needs to be able to help you meet your urgent financial needs. This should offer you an easy way to meet your short-term financial obligations.