We’re fast approaching the end of 2018, which means Chinese New Year 2019 is not far behind. Chinese New Year 2019 ushers in the Year of the Pig and will fall on 5 and 6 February.
So what will the Year of the Pig bring?
According to chinesenewyear.net, those born in the Year of the Pig are not wasteful spenders but they will let themselves enjoy life. They love entertainment and will occasionally treat themselves. They are a bit materialistic, but this is motivation for them to work hard. Being able to hold solid objects in their hands gives them security.
They are energetic and are always enthusiastic and if given the chance, are eager for positions of power and status.
Starting Chinese New Year 2019 right
Chinese believe the Lunar New Year is the most important event in the lunar calendar, with events and omens setting the tone for the rest of the year. Chinese believe in starting Chinese New Year on a prosperous and auspicious note. Hence, many people strive to do right by themselves and others before the new year starts by breaking a bad habit, upholding a promise, or by clearing debt.
If you’re anxious about carrying over debt into the new Lunar Year, take action now. You have a three-month head start to reduce or eliminate debt, so you can start the New Year in a positively “huat” note. Here are two personal finance tools that can help.
1. Balance Transfer (interest-free, flexible repayment)
A balance transfer lets you borrow up to four times your monthly salary at zero percent interest for anywhere between 3 to 12 months, depending on the loan amount.
If you repay your loan in full during the interest-free period, you won’t have to pay any interest. If not, any amount you still owe after the interest-free period will be subject to prevailing interest rates. (Typically equivalent or higher than credit card interest rates.)
Using a balance transfer isn’t completely without cost, as banks usually charge a flat, one-time admin fee. But you can lower your borrowing costs by taking advantage of special promotions.
For example, Standard Chartered’s Fund Transfer facility is currently waiving off the processing fee (through cashback) for new customers for 6-month loans below S$18,000. This effectively means your balance transfer is free of charge, provided you completely pay off the loan before the 6 months is up.
How does a balance transfer help you get out of debt?
Say you have a $10,000 credit card debt that you wish to clear before Chinese New Year.
Apply for a balance transfer of S$10,000 at 6 months interest-free, and immediately pay off your entire credit card debt. You immediately save on paying six months’ worth of credit card interest rates (at 25.9%!). With that breathing space, focus on paying off your balance transfer loan before the 6 month-tenure is up.
Balance transfers are flexible in their repayment, which means you can use balance transfers to pay for large upfront expenditures, then pay off the transfer as and when your funds come in. Remember to pay off the balance transfer before the interest-free period comes to an end, or else you be stuck with a loan with high interest charges.
2. Personal Instalment Loan (low interest, fixed repayments)
Like balance transfers, personal instalment loans can also be used to deal with debt.
Personal loans offered by banks in Singapore have relatively low interest charges (especially compared to credit cards or licensed moneylenders) and their fixed nature make them straightforward and easy to manage.
That’s why personal loans are safe and secure options to prevent debt from getting out of control.
When applying for a personal loan, take note of the:
- Loan amount: Typically, you’ll be able to borrow up to four times of your monthly salary, but your personal circumstances may vary.
- Loan duration or tenure, which is how long the repayment period lasts. Personal instalment loans are repaid with fixed monthly payments until the debt is cleared. Delaying or missing payment will result in penalty charges, which can add to your debt.
- Interest rate, which tells you the cost of borrowing. You should be paying attention to the Effective Interest Rate (EIR) for a truer estimation of the interest you are paying.
When choosing a personal instalment loan, strike a good balance between the duration and interest rate. Some packages offer lower interest rates for a shorter duration, but remember that a shorter duration means a higher amount to repay each month.
Look out, too, for exclusive promotions that can help you save money via vouchers, fees waivers and special interest rates.
When in doubt, SingSaver’s comparison tool helps you quickly and easily find the best personal instalment loan package for you.
How does a personal loan help you get out of debt?
Let’s say your relatives stepped in to help finance your family’s expenses earlier in the year. You’re back on your feet, and have been slowly paying your relatives back.
With Chinese New Year looming, you still owe a few thousand dollars.
A personal loan can provide you with the funds to wipe the slate clean for the Lunar New Year, while at the same time returning what you owe to your relatives. Opt for a longer repayment period to make it easier to manage your cashflow as you pay off your loan every month.
What to read next:
Guide to the Best Personal Loans
SCB Funds Transfer Review: Great to Pay Off Credit Card Debt
Personal Loans: A Beginner’s Guide
Four Types of Personal Loans: What You Need to Know
3 Ways to Better Manage Credit Card Debt in Singapore
By Alevin Chan
A Certified Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimize happiness and enjoyment in his life.