4 Ways to Pay Off Credit Card Debt in Singapore

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If you’re struggling to keep up with your credit card monthly repayments in full, you’re officially in credit card debt. And you’re going to need a strategy to tackle this head on before it snowballs further.

When you’ve racked up high-interest debts from multiple accounts or credit cards, you should quickly move to consolidate all your debt in one place. Your new debt plan should have a lower interest rate than your existing debt, making payments more manageable and/or the repayment period shorter.

The 4 most effective ways to consolidate credit card debt are:

  1. Zero Interest or Balance Transfer Credit Cards
  2. Personal Loan
  3. Line of Credit
  4. Debt Consolidation Plan

1. Zero Interest or Balance Transfer Credit Cards

This type of credit card charges no interest for a promotional period, often for 6 to 12 months, and allows you to transfer all your other credit card balances over to it. Make a disciplined plan to clear any unpaid amount by the end of the promotional period because any remaining balance after is subject to a regular credit card interest rate of 25.9%.

Many issuers charge a processing fee of around 3% – 6%, and some also charge an annual fee. Before you choose a balance transfer, you’d need to calculate if the interest you save over time will cover the cost of the fee.

Pros:

  • 0% promotional interest rate
  • Higher chances of eligibility as loan is on a credit card application

Cons:

  • Processing fee (compare welcome offers on SingSaver where fee is waived)
  • Shorter repayment periods
  • High interest kicks in immediately after promotional period ends

Here’s a quick comparison chart if you’re looking for a short-term loan of $10,000 for six months.

Compare the 0% interest rate on balance transfers with the 25.9% average interest on late credit card payments and you can save hundreds, if not thousands, of dollars each month. For example, if you take the best offer of Standard Chartered’s Funds Transfer, you’re paying a 1.5% processing fee on $10,000 (which amounts to $150), and you still save a lot. The catch, of course, is that you must pay the $10,000 loan in full by the end of the 6 months in order not to get hit by high interest rates again.

Compare best 0% interest or balance transfers for S$10,000 loan with 6 months repayment
Bank NameAnnual Flat
Interest Rate
EIR (Effective
Interest Rate)
Processing/
Annual Fees
Min. Monthly
Repayment
SCB0% p.a.3.51% p.a1.5%1% of principal plus interest, fees and charges, or S$50 whichever is higher%
DBS0% p.a.5.34% p.a.2.5%Min. S$50 or 2.5% of statement balance, whichever is higher
Citibank0% p.a.3.65% p.a.1.58%Min. 1% of transfer amount or S$50, whichever is higher
HSBC2.5% p.a.3.2% p.a.$88Min. 3% of loan balance
Maybank0% p.a.2.96% p.a.1.38%Min. 3% of total payment due or S$10, whichever is higher
OCBC0% p.a.5.34% p.a.2.5%Min. 3% of total outstanding balance or S$50, whichever is higher
UOB0% p.a.5.34% p.a.2.5%Min. 2.5% of the statement balance or S$30, whichever is higher

*Rate varies depending on credit profile

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2. Personal Loan

You can use an unsecured personal loan to consolidate credit card or other types of debt. The loan may give you a lower interest rate on your debt and a fixed repayment period (12 to 84 months) to clear off your debt.

Pros:

  • Fixed interest rate and monthly payment
  • Fixed payment period

Cons:

  • Customers with excellent credit, higher incomes or loan amounts enjoy lowest rates
  • May carry processing fee

Here’s how a $20,000 loan for 3 years (36 months) looks like for someone earning below and above $80,000 annually. The HSBC Personal Loan is a winner and the best choice at 3.7% flat interest rate. If not, the Standard Chartered CashOne loan is the winner at 3.88% flat interest rate. And the best part – instant loan approval and disbursement!

Compare Best Personal Loans (S$20,000 loan over 36 months)
Bank NameAnnual Flat
Interest Rate
EIR (Effective
Interest Rate)
Processing/
Annual Fees
Interest
Charged
Total Loan
To Repay
Monthly
Repayment
SCB3.88% p.a.8.04% p.a$0$2,328$22,328$620
HSBC3.7% p.a.7% p.a.$0$2,220$22,220$617
DBS/POSB3.88% p.a.7.9% p.a.$200$2,328$22,528$620
Citibank3.99% p.a.7.5% p.a.$0$2,394$22,394$622
OCBC3.5% p.a.7.27% p.a.$200$2,104$22,304$614
OCBC4.7% p.a.9.46% p.a.$200$2,820$23,020$634
CIMB4.5% p.a.8.41% p.a.$0$2,700$22,700$631
Maybank5.86% p.a.12% p.a.$400$3,516$23,916$653
BOC6.52% p.a.14.69% p.a.$600$3,912$24,512$664

*Rate available on SingSaver platform, not via bank
**Rate varies depending on credit profile

SingSaver Exclusive: Apply for the Standard Chartered CashOne Loan Promotion by 30 June 2020 and stand to win a $10,000 cash cushion!

From 6 April 2020 to 30 June 2020 (inclusive), when you apply for the Standard Chartered CashOne Loan via SingSaver, you automatically qualify for the lucky draw that may see you win up to $10,000. This means that your next personal loan could be on us.

Find out more about the promotion details and how you can participate here

Standard Chartered CashOne Personal Loan

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3. Line of Credit

The third type of personal loan is the line of credit, which is an overdraft facility that only charges interest when you withdraw from the account. The loan gives you a lower interest rate compared to your credit card and offers a flexible repayment period to clear off unpaid credit card debt. Treat the line of credit as a standby cash facility for emergency use, as it’s available for immediate withdrawal should the need arise. 

Pros:

  • Lower interest rate than a credit card
  • Flexible repayment period
  • Standby cash

Cons:

  • Higher interest rates than personal loans

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4. Debt Consolidation Plan

The fourth type of personal loan is the debt consolidation plan, which is a government-approved scheme available with all leading banks in Singapore. If you have several open unsecured loans – such as line of credit and credit cards – and your debt is more than 12 times your monthly income, you can go for a debt consolidation plan.

Pros:

  • Fixed interest rate and monthly payment
  • Fixed payment period
  • Long repayment period of up to 10 years

Cons:

  • Other loan facilities are closed or suspended until you clear this loan
Compare Best Debt Consolidation Plans (S$80,000 loan over 36 months)
Bank NameAnnual Flat
Interest Rate
EIR (Effective
Interest Rate)
Processing/
Annual Fees
Interest
Charged
Interest +
Fees
Monthly
Repayment
HSBC3.8% p.a.7% p.a.$0$9,120$9,120$2,476
SCB3.98% p.a.7.7% p.a$199$9,552$9,751$2,488
Citibank3.99% p.a.7.5% p.a.$0$9,576$9,576$2,488
UOB4.5% p.a.8.41% p.a.$0$10,800$10,800$2,522
DBS4.58% p.a.8.76% p.a.$99$10,992$11,091$2,528
OCBC6% p.a.11.08% p.a.$0$14,400$14,400$2,622
BOC3.83% p.a.7.48% p.a.$1600$9,192$10,792$2,478

*Rate available on SingSaver platform, not via bank
**Rate varies depending on credit profile

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Read These Next:
Why It’s So Important To Clear Your Credit Card Debt During COVID-19
4 Unexpected Sources of Money to Tap Into During Circuit Breaker
5 Ways to Cope With Financial Setbacks Hitting Singaporeans Hard Amid COVID-19
Personal Loans, Balance Transfers and Credit Lines: The Pros and Cons Rundown
Best Personal Loans In Singapore With The Lowest Interest Rates (2020)


By Rohith Murthy
Rohith leads SingSaver, a financial comparison site aimed at helping consumers in Singapore save money and time by finding the right financial products.