Are you spending more than you can afford?

Transcription

1 Are you spending more than you can afford? Taking control of our spending and borrowing will help our money to go further. Without this, we may soon find ourselves struggling to meet debt obligations. For example, the longer you leave a debt unpaid, the more interest builds up leaving you with a much larger debt repayment. Non-payment or late payment of your credit card bills or other loans could lead to adverse records with the consumer credit bureaus, Credit Bureau (Singapore) Pte Ltd (CBS) and DP Credit Bureau Pte Ltd (DPCB). A poor credit record may hurt your ability to borrow in the future. You can also be made bankrupt if you have unpaid debts of S$10,000 or more. Remember that your debt problems affects not only you, but your loved ones too. Tip 1: Limit your spending As a guide, your total monthly debt commitments (e.g. mortgage payments, car payments and credit card payments) should not exceed 35% of your gross income. Manage your debt and credit card spending wisely. Use debt calculators such as the MoneySENSE debt calculator at Calculator.aspx to estimate the full financial cost of any borrowings. Monitor your total outstanding balances. Set a monthly budget to limit your spending and monitor this. Limit the number of credit cards you hold and ask for lower credit limits to control your spending. Alternatively, you can use a debit card instead; you can only spend what you have in your account. Tip 2: Pay your credit card bills in full, and on time Credit cards are credit facilities: being late and rolling over your credit card bills will attract late fees and interest charges. If you do not make full payment, interest will immediately be charged on any new purchases in addition to the existing outstanding balance. Treat your credit cards as payment instruments. Tip 3 Review your financial situation regularly Reduce credit card spending and reliance on loans if your income falls or there is an increase in your expenses and other financial commitments. Trim your spending and avoid taking on more debt than you can afford.

2 Tip 4 Beware of instalment plans When offered retail instalment plans, do work out the true cost over time and check your budget to ensure you can service the monthly commitments. If you are considering a zero interest instalment payment plan, do find out if there are interest and penalty fees if you do not pay each instalment in full and on time. Who can I approach for help? If you have difficulties paying off your debts or have problems making even the minimum payment, do not wait and hope the problem will go away. Make sure you answer the collectors calls and respond to their letters. Appeal to your lenders for a debt relief instalment payment plan or approach Credit Counselling Singapore ( / for assistance to help resolve your debt problems. How do I read my Credit Report? Credit reports are available from CBS and DPCB. Sample credit reports from the respective bureaus can be found in the following web-pages (below). For illustration purposes, below is a sample report from CBS: CBS: DPCB:

3 Enquiry Number: Enquiry Date: 21/03/2011 Reference: S D_ Data Provided Summary Name: Peter Tan Date of Earliest Known Credit Account 20/03/2007 ID Type: NRIC Previous Enquiries 2 ID Number: S D Accounts 2 Date of Birth: 20/01/1960 Defaults 1 Postal Code: Enquiry Type: NA A quick summary of the report which indicates: Product Type: Self - Your first credit account that is recorded with CBS. Applicant Type: Primary - Number of times that your credit file has been accessed by lenders in response to your credit applications. Personal Details Surname: Tan - - Number of credit facilities with lenders. Number of defaulted accounts with lenders. First Name: Second Name: Fore Names: Peter Unformatted Name: ID Type: ID Number: Account Status History Product Type NRIC S D Date of Birth: 20/01/1960 Gender: Male Nationality: Singapore Marital Status: Married This section records your credit facilities and payment behaviour in the last 12 months. Grantor Bank Account Type If the minimum amount is not paid before the due date, outstanding overdue amounts of $200 or more will be displayed in this column. Date Open / Close Overdue Balance The first row indicates the promptness of payment in the past 12 payment cycles. The second row records any cash advance activities or balance transfer taken out on your credit card. The last row is an indication of any full payment that has been made to your credit card account. Last 12 cycles Cash Advance/ Bal. Transfer Full Payment Overdraft Bank A Joint 22/03/ CCCCBBBBBBBB Unsecured Credit Card Bank B Single 18/10/ /01/2010 This section records all enquiries by lenders, for example, in response to loan applications by you. WFDDCBBBA* * * NNNNNNNYY- - - NNNNNNNNN- - - Previous Enquiries Date Name of Bank Enquiry Type Product Type Account Type 31/01/2010 Bank D New Application Real Estate Loan Joint 14/10/2010 Bank B New Application Motor Vehicle Loan Single This section records defaults on your credit facilities, if any. This information will be displayed indefinitely until a full or negotiated settlement is made. Default Records Product Client Date Loaded Original Amt at load Date Outstanding Balance Status Status Date This column records the amount outstanding at the time the record of the default is uploaded. This column records the amount that currently remains outstanding.

4 Unsecured Credit Card Bank B 25/01/ Outstanding Bureau Score Score : 1908 Risk Grade : BB Risk Grade Description.... : Score : Prob of Default between 0.27 to 0.67% Probability of Default : 0.28% HH GG FF EE DD CC BB AA A numerical expression of your credit worthiness, based on your repayment history. The score ranges from and predicts the probability of you defaulting in the next 12 months. The higher your score, the lower the likelihood of you being delinquent in repayment. Credit scores will be zero for undischarged bankrupts. Before you borrow to spend, pause and consider if you can afford to repay the loan later. Only borrow if you absolutely need to and if it s an amount that you are able to repay. Do not be tempted to borrow more even if you qualify for a higher limit. Retirees should also consider regular cash inflows, and not only available assets, when assessing whether to borrow. Quiz: Stand a chance to win* S$50 NTUC Fairprice shopping vouchers! Simply your entry by 2 May 2014, to MoneySENSE, 10 Shenton Way, MAS Building, Singapore As a guide, your total monthly debt commitments (e.g. mortgage payments, car payments and credit card payments) should not exceed 35% of your gross income. [T/F] 2. A credit report contains records of an individual's credit payment history. Non payments, or late payments of credit card bills or loans may adversely affect your future loan applications. [T/F] 3. If you do not make full payment, interest will immediately be charged on any new purchases in addition to the existing outstanding balance. Treat your credit cards as payment instruments [T/F]

5 4. Borrow up to the maximum of your qualifying loan amount to give yourself some buffer for unexpected expenses. [T/F] (*Refer to the Terms and Conditions of the quiz) MoneySENSE Info-advertorial Quiz 2013/ 2014 Quiz Terms and Conditions 1. By registering or taking part in this contest, all persons participating herein ( participants ) agree to be bound by these Quiz Terms and Conditions. 2. The Quiz is open to all Singapore residents who are: (i) (ii) Not prohibited in any manner by any person, entity, authority or law anywhere in the world from participating in this Quiz or any similar contest; and Not employees of the Monetary Authority of Singapore. 3. Each participant represents and warrants that he or she has met the eligibility criteria set out under these Quiz Terms and Conditions. 4. MoneySENSE info-advertorial will be published in 4-language newspapers: (a) The Straits Times (b) Lianhe Zaobao (c) Berita Minggu (d) Tamil Murasa 5. To qualify for the lucky draw, participants must attempt the quiz questions and answer all questions correctly. Only entries deemed complete and relevant by MoneySENSE and its authorised officers will qualify. 6. MoneySENSE reserves the right to reject any entries submitted for the Quiz. We are not responsible for any incorrect, incomplete or misdirected entries that are not received or are lost, regardless of any circumstances leading to the non-receipt or loss. 7. A maximum of three (3) winners per info-advertorial publication, per language newspapers, will be selected during the Quiz period. 8. Winners will be notified by via post at the address indicated on the submitted contact details.

6 9. Each winner will win a S$50 NTUC Voucher (or CaptiaVoucher). The total cost of the prizes adds up to S$2, Winners agree to comply with all requirements, terms and conditions imposed by the issuers of the vouchers in connection with the use and redemption of the vouchers 11. Date, Time & Place of Draw: The lucky draws will be conducted at the following dates or such other dates as MoneySENSE may determine in its sole and absolute discretion. Month Quiz Period Lucky Draw Date/ Notification by Post Time October October November 2013, 12 November pm January Jan 25 January January 2014, 3pm 8 February 2013 April Apr 2 May May 2014, 3pm 16 May 2014 July July July August 2014, 3pm 12 August The dates, times and venue of the collection of the prizes are as follows: Date: Winners to contact MoneySENSE. Contact details will be included in the notification letter. Collection Day/ Time: Mondays to Friday, 9am 12pm and 2pm to 5 pm Venue: 10 Shenton Way, MAS Building, Singapore Winners shall verify his or her name and contact details by providing original proof of identity to be eligible to collect any prize. The award of prizes shall be subject to verification to the full satisfaction of MoneySENSE. Participants who do not comply with the Quiz Terms and Conditions shall be disqualified. 14. MoneySENSE may, in its sole discretion, modify these Quiz Terms and Conditions, substitute prizes or cancel the quiz, without prior notice to any person. MoneySENSE s decision on all matters relating to this draw will be final, binding and conclusive on all participants, and no correspondence will be entertained. 15. Where prizes contain a specified validity period during which it should be utilised, no requests for extensions or replacements whatsoever will be entertained. Prizes which remain unclaimed by any participants for two (2) months after the date of the notification letter shall be conclusively forfeited by such participants, and such forfeited prize shall be dealt with at MoneySENSE discretion with applicable laws. 16. To the extent permitted by law, each participant and any person acting on his or her behalf agree that MoneySENSE and MAS shall not be responsible or liable for any loss, injury, death, prizes, and shall indemnify MoneySENSE and MAS from any claims, losses, damages, costs or expenses incurred in connection therewith.

7 17. These Quiz Terms and Conditions are governed by Singapore law, and each participant agrees to submit to the exclusive jurisdiction of the Singapore courts.