Coming Soon: Changes to credit cards and unsecured credit rules

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The Monetary Authority of Singapore (MAS) has proposed rules changes to encourage the responsible use of credit card and unsecured credit.

The regulator said the changes are aimed at:

• Improving financial institutions' lending and disclosure practices
• Empowering individuals to make better borrowing decisions, and
• Helping individuals who are at risk of credit problems avoid getting into greater debt

The proposed changes are as follows:

1. Financial institutions will have to review a borrower's outstanding debt and credit limits before granting a new credit card, new unsecured credit facility or increase credit limit.
2. Banks will have to disclose clearly the potential cost and extent of debt accumulated as a result of rolling over debt. Unsolicited offers to customers to raise credit limits will be disallowed.
3. Individual borrowers whose debts are more than 60 days past due date will not be allowed to charge further amounts to their credit cards and tap on other credit facilities.
4. And individuals whose interest bearing balances with a financial institution are more than two months of their income for six consecutive months or more will not be allowed to charge further amounts to their unsecured credit cards, charge cards and unsecured credit facilities from that financial institution, or obtain new cards and unsecured credit facilities from any financial institution.

MAS is also proposing to provide financially secure retirees greater flexibility to qualify for a credit card. Under the proposed changes, individuals above 55 years old can qualify for a credit card if they have an annual income of at least S$15,000, net personal assets exceeding S$750,000, or a guarantor with an annual income of at least S$30,000.

Details of the proposals are released in a consultation paper available on MAS website.

Comments on the proposals should be submitted by 21 January 2013.