Observe these do’s and don’ts when using a Debt Consolidation Plan (DCP) to manage overwhelming credit card debt.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="When debt coming from multiple credit cards becomes too much to handle, a Debt Consolidation Plan (DCP) can help rebuild your financial life.” data-reactid=”21″>When debt coming from multiple credit cards becomes too much to handle, a Debt Consolidation Plan (DCP) can help rebuild your financial life.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="We’ve explained how a DCP works in Singapore. In a nutshell, it combines all your existing unsecured debt into a single loan with, potentially, a lower interest rate. The DCP has a fixed term and monthly payments that go towards paying off your total unsecured debt. If used properly, this should eliminate your debt efficiently, and can even save you money on interest payments.” data-reactid=”22″>We’ve explained how a DCP works in Singapore. In a nutshell, it combines all your existing unsecured debt into a single loan with, potentially, a lower interest rate. The DCP has a fixed term and monthly payments that go towards paying off your total unsecured debt. If used properly, this should eliminate your debt efficiently, and can even save you money on interest payments.

Just like any financial product, however, using a DCP requires discipline and a serious commitment towards paying off your debt.

So before applying for a DCP, be aware of what you should and shouldn’t do when your plan starts.

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="DO Shop Around for the Lowest Interest Rate” data-reactid=”25″>DO Shop Around for the Lowest Interest Rate

There are 14 financial institutions that offer DCP in Singapore. Before applying for one, take time to compare interest rates and find a plan with the lowest one. In general, the longer the loan tenure, the more interest you will pay over the lifetime of the loan. You’ll want to make sure that you’re getting the lowest rate possible.

Some DCPs come with welcome offers like promotional rates, complimentary insurance, and other features that will help you save money. While you shouldn’t choose a financial product for the welcome gifts alone, these money-saving extras make it easier to decide between two equally promising DCPs.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Currently, DBS/POSB’s Debt Consolidation Plan offers one of the lowest interest rates in the market of 3.58% p.a (EIR from 6.56% p.a) with a loan tenure of up to 8 years. It allows you to consolidate all your credit cards and unsecured loan balances while enjoying attractive benefits such as receiving 3% cashback when you refinance your loan with DBS/POSB. Keep in mind that the interest rate offered to you is based on your personal credit profile and may differ from the published rate.&nbsp;” data-reactid=”28″>Currently, DBS/POSB’s Debt Consolidation Plan offers one of the lowest interest rates in the market of 3.58% p.a (EIR from 6.56% p.a) with a loan tenure of up to 8 years. It allows you to consolidate all your credit cards and unsecured loan balances while enjoying attractive benefits such as receiving 3% cashback when you refinance your loan with DBS/POSB. Keep in mind that the interest rate offered to you is based on your personal credit profile and may differ from the published rate. 

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Apply Now” data-reactid=”29″>Apply Now

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="DON’T Miss A Payment ” data-reactid=”30″>DON’T Miss A Payment

Use a DCP calculator to get an idea of how much your monthly payments will cost, then create a budget around this. Once your plan starts, your monthly payment needs to be made in full and on time – no questions asked.

If you miss a payment, you’ll get charged interest and a late fee as determined by the financial institution. This is not too different from what happens when you can’t pay your credit card. Only this time, the consequences are more dire; there are no financial products that can help you in case you default on your DCP.

So develop the discipline and habit of paying your DCP on time.

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="DON’T Use the Credit Facility &nbsp;” data-reactid=”34″>DON’T Use the Credit Facility  

As soon as your DCP gets approved, you won’t be able to use your existing credit cards, personal loans, and other unsecured credit facilities. However, DCP comes bundled with a revolving credit facility (i.e. a credit card) that has a fixed credit limit of 1x your monthly income. This is to provide you with a mode of payment in case you need help covering your daily expenses or run into an emergency.

Because it’s part of the DCP, the credit facility cannot be cancelled and you cannot lower the credit limit. Additionally, you have to bear any fees and interest rates that come with the credit facility.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="It’s important to remember that you are not required to use the credit facility. In fact, we’d go so far as to say as to lock it up and throw away the key, or give the credit facility to someone who can protect it for you.” data-reactid=”37″>It’s important to remember that you are not required to use the credit facility. In fact, we’d go so far as to say as to lock it up and throw away the key, or give the credit facility to someone who can protect it for you.

Using the credit facility undoes all the hard work you’ve put into repaying your credit card debt, and puts you in a financial hole twice as deep. If you use the credit card and are already spending several hundred dollars a month repaying your DCP, there is a good chance you will be unable to pay back the bill in full and on time. And just like your old credit cards, this credit facility comes with late fees and high interest rates that you need to pay in case you miss the due date.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Stay out of the never-ending debt cycle by continuing to save money even if you have credit card debt. Even an amount as low as S$100 can go a long way into building an emergency fund you can turn to in case something goes wrong.” data-reactid=”39″>Stay out of the never-ending debt cycle by continuing to save money even if you have credit card debt. Even an amount as low as S$100 can go a long way into building an emergency fund you can turn to in case something goes wrong.

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="DO Change Your Spending Habits” data-reactid=”40″>DO Change Your Spending Habits

A DCP simplifies the way you pay off multiple credit cards balances, and takes the stress out of juggling several bills and due dates. However, this is only one part of the solution. In order to maintain your debt-free status, your behaviour needs to change.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Start with these easy money habits you can set in minutes, and follow our tips to setting financial resolutions that will actually work for you. Find ways to decrease your spending, and consider doing side income jobs to supplement your income or boost your savings. Being on a DCP is also a great opportunity to master these simple habits that are necessary to owning a credit card.” data-reactid=”46″>Start with these easy money habits you can set in minutes, and follow our tips to setting financial resolutions that will actually work for you. Find ways to decrease your spending, and consider doing side income jobs to supplement your income or boost your savings. Being on a DCP is also a great opportunity to master these simple habits that are necessary to owning a credit card.

A DCP is not a magic bullet to your financial woes. Unless you learn to implement a budget and use credit responsibly, you’ll stay stuck in the same financial pit you were in before.

<h3 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="SingSaver Exclusive: Apply for the Standard Chartered CashOne Loan Promotion by 30 June 2020 and stand to win a $10,000 cash cushion!” data-reactid=”48″>SingSaver Exclusive: Apply for the Standard Chartered CashOne Loan Promotion by 30 June 2020 and stand to win a $10,000 cash cushion!

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="From 6 April 2020 to 30 June 2020 (inclusive), when you apply for the&nbsp;Standard Chartered CashOne Loan&nbsp;via SingSaver, you automatically qualify for the lucky draw that may see you win up to $10,000! This means your next personal loan could be on us. You will also receive 50%&nbsp;off your first month’s instalment amount in the form of a cashback.” data-reactid=”49″>From 6 April 2020 to 30 June 2020 (inclusive), when you apply for the Standard Chartered CashOne Loan via SingSaver, you automatically qualify for the lucky draw that may see you win up to $10,000! This means your next personal loan could be on us. You will also receive 50off your first month’s instalment amount in the form of a cashback.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Get Your Cash Cushion Now!” data-reactid=”50″>Get Your Cash Cushion Now!

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Read These Next:
Best Debt Consolidation Plans in Singapore 2020
4 Ways to Pay Off Credit Card Debt in Singapore
What is a Debt Consolidation Plan and How Does it Work in Singapore?
COVID-19 Special Financial Relief: Can It Help Manage Your Debt?
Why It’s So Important To Clear Your Credit Card Debt During COVID-19” data-reactid=”51″>Read These Next:
Best Debt Consolidation Plans in Singapore 2020
4 Ways to Pay Off Credit Card Debt in Singapore
What is a Debt Consolidation Plan and How Does it Work in Singapore?
COVID-19 Special Financial Relief: Can It Help Manage Your Debt?
Why It’s So Important To Clear Your Credit Card Debt During COVID-19

Lauren DadoLauren Dado
Lauren Dado

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="By&nbsp;Lauren Dado
Lauren has been a content strategist and digital marketer since 2007. As SingSaver.com.sg’s Content Manager, Lauren edits and publishes personal finance stories to help Singaporeans save money. Her work has appeared in publications like Her World, Asia One, and Women’s Weekly.” data-reactid=”63″>By Lauren Dado
Lauren has been a content strategist and digital marketer since 2007. As SingSaver.com.sg’s Content Manager, Lauren edits and publishes personal finance stories to help Singaporeans save money. Her work has appeared in publications like Her World, Asia One, and Women’s Weekly.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The post Do’s and Don’ts of a Debt Consolidation Plan appeared first on SingSaver Blog – We Compare, You Save.” data-reactid=”64″>The post Do’s and Don’ts of a Debt Consolidation Plan appeared first on SingSaver Blog – We Compare, You Save.