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11 Golden Tips To Settle Your Credit Card Debts

Multiple credit card
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It’s convenient to have a credit card in Singapore, especially today where cashless transactions fare better than using actual cash to pay retailers. However, with great convenience comes big problems in the form of credit card debt Singapore. It’s easy to get tremendous interest in unpaid credit card debt if you continue to purchase anything on impulse.
If you’re in a situation where you’re dealing with a high interest credit card debt, you don’t need to worry. Just follow these 11 convincing tips to help you manage and get rid of your credit card debt once and for all.

man calculating debt-to-income ratio

1. Calculate Your Debt-to-Income Ratio

Every person who owns a credit card or paying for financing can calculate their debt-to-income ratio accurately. These are all your monthly or yearly debt payments divided by your monthly or yearly income. Most banks in Singapore that provide personal loans or credit cards calculate this ratio to estimate the borrower or credit card owner’s risk.

If your debt-to-income ratio is below 40%, you can still repay your credit card debt in Singapore by adjusting your expenses. Furthermore, your excellent debt-to-income ratio guarantees you won’t need to cut or budget for your spending too. Otherwise, it’s time to rethink your spending behavior.

2. Spend Less But Don’t Overdo It

If your debt-to-income ratio proves to go beyond 50%, you’ll need to cut your expenses significantly to prevent incurring high interest penalties on your personal loan. Make sure to spend less by creating a budget and setting one financial goal. This objective can be to rid yourself of debt or curb the increasing interest rate of your credit cards.

Contrary to popular opinion, it’s alright to cut back on your needs within five percent of your average spending. Anything beyond is impractical. Remember that your food, utilities, and other needs require proper overhead, even if you’re currently repaying credit card debt.

3. Prioritize The Largest Card Debt You Have

You won’t need to run towards credit counseling Singapore or debt management companies immediately. If you can still organize and juggle your debts in Singapore, you still have a chance at an expense-free personal debt removal.

When paying for your outstanding debt, prioritize paying the most significant credit card debt you have. An extremely high interest rate can catch you off-guard and increase your regular payments.

Girl recording her expenses manually

4. Track All Your Spending and Credit Card Activities Manually

The best way to see if you’re making progress paying off your debt without compromising your needs is to track all your expenses manually. You won’t need to use a pen and paper (unless you prefer it). Truthfully, it can be fun and convenient using financial management applications, such as Goodbudget, Mint, Spendee, Seedly, and others

It might feel like a tremendous hassle having to take your phone out for every purchase you make. However, the added time you spend recording your expenses will help you think about your future purchasing decisions. Every time you record, you see a summary of your current financial situation. In doing so, you see that when you pay your credit card debt more than the minimum required, you help relieve yourself of a significant personal loan debt amount and their accompanying interest rates.

5. Consider Having a Part-Time or Second Job

It’s not the most ideal solution, but having a new job can help improve your debt situation faster. Truthfully, you’ll be exceedingly tired, and you’ll miss some important events in your personal life for a while. However, being debt free allows you to enjoy all these once again, guilt-free and without troubles.

With a country-wide lockdown as of this writing, online work and work-from-home employments are the best opportunities for you to finally pay off that personal loan with its progressively-increasing interest rates.

6. Get a Loan to Consolidate Your Debt

One, two, or more of your credit card debt and personal loans may be sending you on a feedback loop. Your balance transfer amounts have started being insufficient because of the troubling interest rates the lender has imposed on you.

You can ask your lender to relax their interest rate so you can pay back the remaining amount you owe through regular balance transfers. However, keep in mind that the final decision on every aspect of debt arrangements — including the processing fee and email address you’ll receive the details — depends solely on the lender of personal loans.

Even if some of their policies seem unfair, the Monetary Authority of Singapore most often has a minimal say to help adjust your credit card debt arrangement. However, if you’re successful in lowering your interest or negotiating something better to resolve your credit card debt, you’ll likely see money lender offer you the following plans and choose one that suits your goals.

man looking for money from his piggy bank

7. Lump-Sum Settlements

This plan is useful only if you have considerable equity, such as an inheritance or property of good value to offer your lender. In turn, the lender can negotiate with you whether this particular property or cash on hand suffices to forgive your outstanding credit card dues. High-value equity might urge lenders to forgive the entire loan Singapore altogether. This equity can be in the form of the majority or full property ownership.

8. Semi-Forgiveness Arrangement

Medium-value equity, such as vehicles and securities of varying amounts, can convince your lender to forgive a part of your credit card dues. Alternatively, they might decide to only remove or significantly reduce your current credit card interest rates. If you previously had good credit standing and failed this one time to handle your credit interest leading to inflation, most lenders can grant you interest and forgive punitive charges (late fees, over-limit charges, and others). However, they might report this as unfavorable in your credit scores.

9. Forbearance For Special Situations

You do not need any form of equity if you can prove to lenders that you’ve been in a car accident or have a severe medical condition preventing you from retaining your professional capabilities. Forbearance is similar to a semi-forgiveness loans forgiveness program. However, it focuses on providing you with reprieve by lowering or removing your credit card interest rates, halting punitive fees, and skip payments until you’re capable of doing your work once again.

Getting advice from a financial advisor

10. Get Advice from Financial Advisors

It might feel shameful having to discuss your outstanding dues with your lender. Furthermore, it feels wrong to negotiate for better rates than you’re having. However, if banks intend to claim back their money on time and in full, they’ll willingly want to help you out as long as it is fair for them.

If you feel it difficult to negotiate with your lenders, you can get advice or even use financial advisors to help you sort out your debt. They will cost you a little bit, but they can help you have a clear understanding of your financial situation and represent you before your lenders.

Some banks and lenders can tell you to settle your outstanding debt, and they’ll freeze your penalties and increase the interest rate of multiple credit cards until you’ve addressed the outstanding amount. While this means you can’t use your credit cards, it also means a frozen interest rate. Then, your lender will ask you to pay for the interest penalties after that, which gives you and your lender a fair outcome.

11. Consider Declaring Personal Bankruptcy

If your outstanding credit card debt benefits is above S$15,000, you can declare yourself as personally bankrupt. An estate executor independent of both you and the lender will oversee the appraisal and selling of any property you might have that can help repay your lender. Consider this option your last resort when settling your dues because you’ll lose properties in the process.

Credit Counselling Singapore Is The Way To Go

CCS Singapore can help you organize your loan payments and debts, especially if you’re juggling more than two financings. Furthermore, charitable institutions and financial unions can provide you credit management and counseling services free of charge or for a small fee.

Consolidation is Essential For Those With Huge Credit Card Debt

The debt consolidation plan is useful for borrowers who have sunken deep into debts without any way to repay their lenders. While bankruptcy is an option, consolidators can negotiate and allow borrowers to pay low-interest financing for all the total payments of each of their dues. Consolidators have varying rates and guidelines, so pay great attention to their terms and conditions.

Two guys agreeing by shaking hands

Work With Licensed Moneylenders

Singapore’s leaders, under the oversight of the Ministry of Law and found in the Registry of Moneylender, are trustworthy. Often, they can offer you amounts high enough to repay the financial commitment. Furthermore, they approve unsecured loans in less than a week if you can bring supporting documents to supplement your financial capabilities.

Find the Best And Trustworthy Moneylenders Near You to Address Your Credit Card Debts!

If you have yet to find an authorised money lender Singapore to work with and address your dues with helpful low-interest personal loans and financial products to help you get out of debt, Loan Advisor can provide you a list of the most dependable lenders in the country and their current standing.

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