Credit Card Suspended? Here’s Where to Find Money

Here’s where to find money in Singapore if your credit card (or creditline) is ‘frozen’ due to the new limit on unsecured debt. Nobody likes to live on credit. But sometimes life dealt you a bad hand and you needed financial help for a few more months. The new uncollateralised debt limit, set by the Monetary Authority of Singapore (MAS), may dash your hopes.

What is the New Limit on Unsecured Debt?

From 1 June 2017, the MAS has set a new limit on how much unpaid debt you can owe on unsecured credit facilities. It applies across all financial institutions (FIs) in Singapore. You will lose access to credit facilities from FIs when the following occurs: Your interest-bearing unsecured debt exceeds 18X of your monthly income, for 3 months in a row.

What is Interest-bearing Unsecured Debt?

It is debt that need the payment of interest, and it is not backed by any form of collateral such as property.

WHAT DOES IT INCLUDES?

It includes debt on credit cards, credit lines, personal loans and overdraft facilities from FIs.

WHAT DOES IT EXCLUDE?

It excludes debt on unsecured loans for needs-based purposes. For example, business loan, education and medical loans.

Which Financial Institutions (FIs) are Involved?

Financial institutions consist of banks and other credit card issuers in Singapore.

What Will Happen If I Exceed the New Limit?

Once you exceeded the limit, you can no longer carry out the following:

• Apply for new credit card
• Apply for new unsecured credit facility (e.g. line of credit or personal loan)
• Request for existing credit card limit increase
• Request for existing unsecured credit facility limit increase
• Charge to your existing credit card
• Pay recurring charges such as utility bill with your existing credit card
• Withdraw cash or issue cheques from unsecured credit line

Can You Give Me an Example?

Let’s say your income per month is S$3,000. And we also assume that this is the income data FIs have on you. So 18x of your monthly income will be S$54,000 (i.e. S$3,000 x 18). If you have 3 credit cards with Citibank, DBS, and HSBC with unpaid balances of S$10,000 each. Additionally, you have 2 unsecured creditlines with UOB and OCBC with outstanding debt of S$15,000 each. Your interest-bearing unpaid debt across these 5 banks are S$60,000 in total. It has gone beyond 18x of your monthly income. And this S$60k remains unpaid for January, February and March. By end April, all 5 banks will have your unsecured line of credit and credit card suspended. You will no longer be able to carry the things that we mentioned under “What Will Happen If I Exceed the New Limit?” until you meet the following conditions:

• Lower your interest-bearing no collateral debt to below 18x of your monthly income
• Submit latest income document/s to the banks for credit review
• Banks cancel the suspension based on their credit review results

How Can I Determine My Total Interest-bearing Unsecured Debt?

The credit bureaus collect and maintain individual credit information submitted by their members. Members include banks, credit card issuers and finance companies. These bureaus will sum up your outstanding debt reported by their members. It consists of debt across all secured and unsecured credit facilities. They will further separate your uncollateralised debt into 2 components. They are interest-bearing and non-interest bearing debt. And FIs only look at interest-bearing unsecured debt when establishing your lending limit. You can get access to your credit report at Credit Bureau Singapore and DP Credit Bureau.

Where Can I Get Money if My Credit Card is Suspended?

If find yourself in the situation of suspension due to MAS unsecured credit rules, you can turn to AK Credit. Trusted licensed money lenders, like us, can help you tide over with unsecured loans at low interest rates. Contact us today to find out more!