Dear Editor,

We refer to Mr Vincent Ong Kok Lam’s letter “Review minimum salary requirement for credit cards” and his feedback on the income eligibility for credit cards (The Straits Times, 27 October 2016).

The Monetary Authority of Singapore (MAS) has set the minimum annual income requirements for credit card at $30,000 for individuals below 55 years old. In setting the eligibility at this level of income, the MAS has to balance several objectives. The aim is to provide eligible individuals with a convenient mode of payment and access to short-term credit when they need it, while encouraging prudent borrowing and lending practices.

To minimise the risk of cardholders borrowing beyond their means, the maximum amount of credit that each financial institution can extend to a borrower is capped at four times his monthly income. This limit applies regardless of the number of credit cards a borrower has with the same financial institution. Further, there is an industry-wide borrowing limit on the amount of unsecured credit that all financial institutions can provide to the same borrower. The limit will be progressively tightened to 12 times the cardholder’s monthly income by June 2019.

In addition, financial institutions are required to conduct fresh credit bureau and income checks on borrowers, when they receive applications for new unsecured credit facilities or credit limit increases. They must also conduct such checks where there are signs of potential debt problems. These checks will help financial institutions to decide whether to extend credit to the borrower, or make adjustments to any existing credit granted.  

Bey Mui Leng (Ms)
Director (Corporate Communications)
Monetary Authority of Singapore