Many people in Singapore hold several credit cards at the same time, since each card has its own unique advantages. Under such circumstances, people can fall into debt trap, because he owes money to several creditors. You need to keep track of several payments and due dates, and constant reminders of an unsettled balance only increase tension. Since you are behind payment deadlines, your debts will only increase. One way out of this debt trap is a personal loan, known as a Debt Management Plan or DCP.
DCP was introduced by the Banks Association of Singapore (ABS) at the beginning of 2017 for all Singapore citizens and permanent residents who have difficulty repaying their debts. DCP is a type of personal loan where you can borrow a lump sum to pay off all your debts right away. However, you can only use DCP for unsecured credit facilities such as personal loans, credit cards, and other lines of credit. Let's look at some of the advantages and disadvantages of a debt settlement plan:
You only need to make one payment per month, because DCP combines all your debts into one. This will help you save energy and time and get rid of the stress associated with missing a payment, since you no longer need to keep track of all the different lenders.
Lowering interest rates with DCP makes it easier to pay off all your debts and actually provides visible progress.
When DCP is well managed, you are more likely to save some money instead of spending all your monthly earnings paying bills.
The biggest drawback of DCP is the ability to get more debt. People who do not care about their expenses and have the habit of gambling are prone to get into debt even more.
Even at low interest rates, it may take you longer to pay off your debt at DCP. Ultimately, this will lead to a higher interest payment. To avoid this, you should focus on paying off your debt as early as possible.
If you do not make timely payments, fines and interest will be imposed, which will only increase your burden.
If you decide to transfer your DCP to other banks, you will have to do this three months after your DCP is authorized. You will be subject to fines that the original bank may charge for early termination or transfer of your DCP. Since a long commitment is required with DCP, you should carefully review the issue before applying for a plan.
Once you have a debt settlement plan, all of your credit cards and unsecured debts will be deferred. You will be offered a revolving loan equivalent to one month's salary. You will not be able to apply for any new unsecured card for the duration of your DCP, unless you have repaid part of your debt.
To be eligible for DCP, you must be a Singaporean or permanent resident. You must have personal property worth less than $ 2 million. United States, or your earnings should be between 20,000 and 120,000 US dollars per year. Your consolidated unsecured debts should exceed your monthly income by more than 12 times.
Debt Management Plan Fees
There are several banks in Singapore that charge a fixed processing fee, while others charge up to 3% of the authorized loan amount. You must choose a personal loan to finance your crises if you can wait a few days. Personal loans are better than cash advance due to fixed monthly payments and low interest rates.
A debt settlement plan will help you pay a lower monthly amount with lower interest rates. As a result, this will help you focus on one contribution each month and have less financial outlay. A personal loan in the form of a Debt Management Plan will help you negotiate a cancellation of penalties with your lenders to reduce the amount of your loan.