Best Debt Consolidation Plans in Singapore (2023)

A Debt Consolidation Plan (DCP), like its name suggests, allows you to combine all your multiple outstanding unsecured debts into one singular repayment plan. It is usually the option to consider if you have a poor credit score and are unlikely to be able to get any loans from any bank.

Through a DCP, your preferred bank will pay off all outstanding debts with other banks and consolidate them into one single loan for you. You’ll be charged a lower interest rate than the typical interest rates of a personal loan. The DCP has to be repaid in fixed monthly instalments over a period of up to 10 years. The minimum amount that can be consolidated under the DCP is 12 times your monthly salary.

A DCP is most effective when you are already having trouble paying off existing high-interest loans, including credit card debt. This is because a DCP can offer lower interest rates and a longer loan tenure for you to better manage your monthly repayment amounts. It also streamlines existing payments to one credit facility, allowing you to manage one single loan rather than to juggle a few outstanding loans at the same time.

DCP is an unsecured credit product and your credit bureau record will be updated to reflect your DCP should you choose to take one. However, it could have a positive effect on your credit score as long as you meet your monthly repayments.

You have to be a Singapore citizen or PR to be eligible for a DCP. Additionally, you need to have:

• An annual income between S$20,000 and S$120,000
• A net value of personal assets not exceeding S$2 million
• A net size of unsecured debts exceeding 12 times your monthly income

Debt Consolidations Plans are meant for unsecured debt, such as credit card balances and personal loans. Secured debts, such as car or housing loans, cannot be consolidated under DCP. Loans taken out for specific purposes, such as renovation loans, education loans, medical loans, and business loans, also cannot be consolidated under DCP.

Debt consolidations plans are currently available at 14 participating financial institutions (FI) in Singapore:

• American Express International, Inc.
• Bank of China Limited Singapore
• CIMB Bank Berhad
• Citibank Singapore Limited
• DBS Bank Ltd
• Diners Club Singapore Pte Ltd
• HL Bank
• HSBC Bank (Singapore) Limited
• Industrial and Commercial Bank of China Limited
• Standard Chartered Bank (Singapore) Limited
• Maybank Singapore Limited
• Oversea-Chinese Banking Corporation Limited
• RHB Bank Berhad
• United Overseas Bank Limited

You can apply for a DCP from any financial institution of your choice, even if you don’t bank with them currently. It is important to note that each financial institution will have their own terms, conditions, rates, fees and promotions for DCPs.

Firstly, you will owe the bank your total outstanding debt, including interest. You will also have to pay an additional 5% over and above the total DCP amount. This 5% is to cater for any incidental charges, such as interest and fees payable, incurred from the time the DCP is approved till the time the disbursed DCP amount is received by the FI. The 5% buffer is also mandatory for the individual’s first approved DCP loan.

It can be the first step to helping you get out of debt, especially when you have too much outstanding debt to pay off. A DCP also offers relatively low interest rates, when compared to other high interest debts such as credit card bills. You can also get a DCP from a bank that you do not currently bank with, giving you more flexibility when it comes to choosing a DCP that suits you. You can also read this guide on DCP, what it is and how it works in Singapore.

DCP loan tenures can range from 3 years up to 10 years. The maximum loan tenure differs from bank to bank, for example, Citibank DCP has a loan tenure of up to 7 years, while Standard Chartered DCP offers a loan tenure of up to 10 years.

You have to consolidate all of your outstanding debt that is unsecured. This is so that you can enter a DCP in full with a single bank. Ultimately, it is to consolidate all of your debts with a single bank so that you can pay off a single loan amount instead.

There are a few fees and charges that you could incur:

• Processing fees: This processing fee can range from $0 to about $600. While some banks offer $0 processing fees, this could come with a higher interest rate.
• Early termination fee: A fee you would incur should you opt to repay your loan before the loan tenure is up.
• Late fee: Applies if you fail to pay the monthly repayment on time.

There is a possibility that your approved DCP amount may be insufficient to cover all your outstanding debts. If so, you will need to make alternative arrangements to pay off the amounts not covered by your DCP. You should also be aware that the interest rate offered to you could differ based on your personal credit profile.

You can also read this guide on DCP, what it is and how it works in Singapore.

Before you apply, make sure you have the following documents ready:

• Photocopy of your NRIC (front and back)
• Latest Income Documents (e.g. latest computerised payslip, Income Tax Notice Of Assessment or 12 months CPF Contribution History Statement)
• Latest credit card and unsecured loan statements
• Latest Credit Bureau Report
• A confirmation letter that shows unbilled balances for your unsecured credit card and instalment plans

Here are some things to consider when choosing a DCP:

• Annual interest rate
• Effective interest rate
• Processing fees
• Loan tenure
• Ongoing promotions: For example, some banks give you 5% cashback when your loan is approved

Based on the factors that you deem to be more important, you can then decide on the DCP to take. For example, not all banks offer 10 year loan tenures. Some banks also offer to waive processing fees, but charge higher interest rates.

You can first compare different DCP on the SingSaver website. You can sort the DCP options by monthly repayment, annual interest rate or processing fee. Refine your search by entering your loan amount, repayment period or selecting a specific provider.

Yes. Just like how you can apply for credit cards from any banks, you can apply for a DCP with a bank that you are not currently banking with. You can make your own decision on the bank to apply for a DCP with, based on your own decision criterias.

You do not have to apply to all participating FIs for a DCP. You may approach any of the 14 participating FIs to apply. Different FIs have different application requirements for DCP and ultimately, it is up to the FI to decide whether to offer you a DCP.

While you may apply to more than one bank for a DCP, you can ultimately only take a DCP with one bank at any one time. Your DCP must be done in full with one Participating FI so that you may pay down your total outstanding amounts with a single FI.

Yes, you can refinance your DCP. In the event that you find a bank or FI with a better deal, you can transfer your current DCP over. Notify your current bank/FI of your intent to refinance and they will be able to advise you on the process and fees, if any. However, do keep in mind that you may only do so at least 3 months after the approval of your latest DCP. The transfer is also subject to any penalty fee imposed by the original DCP financial institution for early termination.

A DCP is typically for those that have a large amount of debt to clear, for example, when you have outstanding debt that is more than 12 times your monthly salary. A DCP would help to consolidate all debts into a single loan with a bank. If you have smaller debt amounts, you can consider other unsecured loans such as a balance transfer or personal loans. Personal loans can also be considered during situations when a sum of cash is required for purposes such as a home renovation, wedding, unexpected medical expenses, buying a car and more.

Similar to the practice for other products, your credit information will stay on your Credit Bureau report for 3 years after DCP closure.