Debt Consolidation|Debt Consolidation in Singapore

When Should You Take Up a Debt Consolidation Plan?

Debt Consolidation in Singapore
Debt Consolidation in Singapore

Many of us are acquainted with personal loans, but what exactly is a Debt Consolidation Plan?

The Debt Consolidation Plan (DCP) is a new initiative by the Association of Banks in Singapore to help you combine all your outstanding debts into one and to pay them off on scheduled repayments.

This type of loan is extremely useful for those who might have taken up multiple lines of credit and having some trouble paying them off.  You might be wondering, “If I already have 3 outstanding debts to pay off, why would I take on another debt with a debt consolidation loan?” Well, let us show you the benefits with an example:

Outstanding debts

  • S$10,000 on credit card A with 26% interest per annum
  • S$30,000 on a personal loan with 12% interest per annum
  • S$15,000 on credit card B with 26% interest per annum

With these 3 different loans, if you are only paying off the minimum per month, you will be accruing interest and finance charges, which can amount to a substantial debt that is much more than the initial amount. The total interest payments over 4 years would be approximately S$23,000.

With the Citi Debt Consolidation Plan, you can enjoy a much lower and competitive interest rate of 10.5% EIR per annum. Not only would you be able to just focus on paying off a single debt, you also get to save more than S$10,000 in interest payments over 4 years!

So, the advantages of taking up the Citi Debt Consolidation Plan are obvious –

  • You get to save a huge amount of interest payments
  • It gets your loan repayments simplified and organised since you only need to make a single point of repayment
  • The Citi DCP loan rate you are getting is considerably lower than the bank credit card interest rate
  • Complimentary protection insurance coverage of up to S$160,000

Furthermore, you will be provided with a credit card facility with 1x your monthly income to pay for your daily essentials.

The  Citi Debt Consolidation Plan is only available to Singaporeans and Permanent Residents, who have unsecured credit facilities amounting to a minimum of 12x their monthly income.  Certain categories of unsecured loans are excluded from DCP, such as joint accounts, education loans, renovation loans, medical loans, and/or credit facilities granted for business purposes.

To qualify, you must be a salaried employee with an annual income between S$30,000 and S$120,000 (at least S$60,000 if you are not an existing Citibank customer), with Net Personal Assets of less than S$2 million.

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* The calculations used in the article above are for illustrative purposes only