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Spender Beware

I have gotten unsolicited calls from telemarketers before, offering me loans or asking me to sign up for credit cards. I’ve found the fastest way to end the call is to tell them “sorry, I don’t have the required minimum income“, and most of the time, they are more eager than me to hang up the phone.

Of course not all these offers are bad. I’ve friends who after deciding to end their relationship with credit card debt once and for all, by taking these loans at a lower but fixed interest rates (or 0% with a processing fee), and clearing their credit card balance. They have been faithfully paying off the required monthly balance since, and I bet it’s a relieve to see the debt finally shrinking.

Solicitations are good or bad depending on whether you want/need what they are selling or not. Whatever the case, always read the fine print before signing on the dotted line.

Spender Beware!

Another thing that caught my eye was the writer mentioned that the annual income minimum for credit cards has been lowered to $24,000. I haven’t read anything about that so far. Is that a misprint?

Letter from Chin Kee Thou

I READ with interest the report “Income checks: Onus on banks or borrowers” (March 10).

Banks are profit-oriented entities, and like any other businesses are only interested in pushing their products and services by extending loans, encouraging credit card usage and signing up new cardholders, even in an economic downturn.

Recently, the Monetary Authority of Singapore lowered the annual income limit to qualify for a credit card to $24,000 per annum – it was originally $30,000 – to be eligible for unsecured borrowing, subject to a limit of two months? salary.

I have been an ordinary credit cardholder since 1981, and many times over the years, even in difficult economic times, the issuing bank has offered unsolicited loans.

Whenever I make a big purchase item with my card, aletter soon follows asking if I want to transfer the amount to a loan without checking my payment pattern – and I always pay up in full, on time. It feels like an insult.

A year ago, my credit card, with a limit which is more than adequate for my needs, was unilaterally upgraded to a platinum status without checking on my income status. I turned down the upgrade. My employment and income status had changed – I was by now a retiree. A platinum card required a high annual income and also attracted higher subscription fees.

Last year, I was offered another unsolicited loan by the bank, which offered a free watch if I were to bank in a cheque for $6,000 at “0 per cent” interest for the first six months. But the fine print revealed that there would be a “processing fee” of 5 per cent. Following the six-month holiday, interest at the prevailing rate of 24 per cent per annum would apply. I have related this episode in “Beware the credit card ?debt trap?” (Nov 19).

Banks have no moral responsibility in pushing their products and services in a sensible manner which would curtail overspending. That would make no sense for the banks as businesses.

In the words of Ms Ong Ai Boon, director of the Association of Banks in Singapore (“Consumers make the final choice”, Nov 27): “Credit cards are widely-used products that banks will market. Ultimately, the consumer must consider his financial position and decide on whether he requires a credit facility or a credit card”.

The doctrine of caveat emptor applies. Consumers should be responsible for their financial affairs and live within their income limits. Be disciplined and resist overspending, especially during these hard times, or you will be placing a noose around your own neck.

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