No minimum pay needed for new credit card
-
July 19, 2007
No minimum pay needed for new credit card
Citibank's new offering aimed at young adults; credit limit set at $500
By Bryan Lee
A RADICALLY new type of credit card with no minimum income requirement and just $500 in credit has arrived in Singapore.
Global banking giant Citibank yesterday launched Singapore's first-ever credit card that does away with the standard $30,000 minimum annual income requirement.
The American bank is taking advantage of a recent regulatory change and will start taking applications for its new Citi Clear Card from today. The card, mainly aimed at students and other young adults, will have higher 28 per cent interest on rollover balances.
Citibank says the new plastic is unlikely to be instantly profitable. But it says the card will give it a head start in building relationships with young adults aged 18 to 35, so that it can later sell them other financial services when their careers are under way.
Parental consent is needed for applicants under 21 but the bank will not require their parents' income information. Citibank will also accept applications from older Singaporeans.
Still, industry insiders said university students will be the prime targets as they are more likely to embark on well-paying careers on graduation, becoming potentially lucrative clients.
Indeed, tertiary students were highlighted as a target group by the three local banks which are looking to launch similar credit cards soon.
Citibank's latest salvo in the local credit card market comes hot on the heels of a change in March by the Monetary Authority of Singapore to rules for unsecured loans. In line with a worldwide shift towards allowing banks to manage their own risks, banks in Singapore are now exempt from a long-standing salary criterion that has put credit cards out of the reach of 900,000 Singaporeans aged 18 to 54. The only catch is that the maximum credit they can extend to these customers is $500, a fraction of the typical limit of two months' pay.
This is not uncommon elsewhere. Students in the United States have long had access to credit cards with US$2,000 (S$3,030) limits.
'The opening of this segment has given us the opportunity to extend our reach to a new group of consumers,' said Citibank Singapore marketing director Ong Lay Choo.
The bank is focusing on the 500,000 young adults aged 18 to 35, who earn less than $30,000 a year. It is using its Clear Card brand, a standard card aimed at young professionals.
But it is not without cost. Virgin cardholders, some with no job or credit history, face a higher risk of default. So they will be monitored closely.
For instance, cards will be blocked instantly if the minimum monthly payment is not made on time. This differs from the standard practice where late-paying customers are slapped with a penalty but are able to keep using their cards without disruption.
The low credit limit also caps the amount of fees and interest that can be reaped from these customers.
Junior college student Sng Ren Zheng, son of a businessman, is keen to apply for a card after he turns 18 next month. 'I don't always have much cash on hand. A credit card will come in handy when I want to buy that $399 Hugo Boss shirt. If I wait for my $150 weekly allowance, the shirt might be gone.'
But university student Gabriel Tan, 23, said he is happy with the Visa debit card that he already holds, as it functions almost like a credit card.
DBS Bank consumer banking head Edmund Koh said the local bank stands to benefit most when it launches its own $500-limit credit card.
'Through POSB, we are already serving a base of mass-market customers. We know their savings behaviour which will reduce our credit risk. This allows us to offer this product at a lower cost,' he said.
OCBC credit cards head Wong Ting Mei said the bank will be launching a similar card aimed at tertiary students. University students offer an added bonus. Said an industry expert: 'Surely their parents will make sure they don't start off with a bad credit history, wouldn't they?' -
July 19, 2007
Parents slam new credit card scheme
By Claire Huang
SINGAPORE parents are alarmed at the recent launch of a new credit card that allows young consumers to apply even if they do not earn a single cent.
This new scheme by Citibank which kicked off yesterday is called Clear Card.
Earlier in March, the Monetary Authority of Singapore (MAS) changed its regulation on unsecured loans, thus allowing banks to come up with credit cards that need no minimum income.
Under the Clear Card scheme, consumers aged as young as 18 can apply for the card which allows a maximum monthly credit limit of $500.
The interest rate on rollover balance is 28 per cent, and is four per cent higher than the standard rate.
High interest rates whatsoever, some say they're all for it.
Secondary three student Lim Jun Shang says it's 'a good idea' and that now, he can 'spend money without thinking'.
Giving the thumbs up to this scheme is Justin Seah, also a student, who feels that although it may cultivate over-reliance on future money, it's handy to have a credit card.
But parents do not welcome the idea.
Mdm Virginia Ng, 50, says 'it's not right', as it means young adults will be able to spend money without first earning it.
But Citibank says this is the time for young adults to learn how to manage their finances.
Ms Alice Fok, Marketing Director of Citibank Credit Cards says as a parent herself, she feels that letting her children learn the intricacies in balancing their finances will benefit them in future.
And one regular Straits Times reader agrees.
Mr Leong Sze Hian, a financial professional pointed out that there is a tendency for young people to cultivate an 'easy spending' habit, but he's not stopping his 22-year-old daughter from applying for one.
'Sure go and apply, but you (his daughter) have to pay it when you use it and if you can't pay, you'll have to pay the interest also.
'No way am I going to bail you out. (I) Got to make that clear right from the start.' -
THIS IS REALLY BAD.
-
more debts ppl?
-
$500 still can ctrl. not that bad. if $5000 icecream
-
whats the interest? feel like applying 1.
so if i spent 500$, but i pay on time, do i still need to pay interest? -
Can u guys see this?
Although there is no min income or guarantor needed,these banks plays on the fact that parents will step forward to repay the debts of their children.
And looking at the cash flow climate of teenangers these days,i see a very serious problem awaiting to erupt. -
I am absolutely against this sort of thing.
The comments of that fella who wants to use it to buy a $399 Hugo Boss shirt only underlines my sentiments. I wonder if he realises that while you can pay in small installments, the interest will eventually snowball the more you drag out your payments... and the final amount can be far more substantial than $399.
If you want to teach the kids financial responsibility, then let them use debit cards instead. Let them use their savings instead of credit to buy things.
Dollars to donuts say that some of these kids who use their credit cards will hit the $500 limit in no time at all.... and they'll end up whining and begging for their parents to bail them out. -
A worrying sight..Originally posted by duotiga83:July 19, 2007
No minimum pay needed for new credit card
Citibank's new offering aimed at young adults; credit limit set at $500
By Bryan Lee
A RADICALLY new type of credit card with no minimum income requirement and just $500 in credit has arrived in Singapore.
Global banking giant Citibank yesterday launched Singapore's first-ever credit card that does away with the standard $30,000 minimum annual income requirement.
The American bank is taking advantage of a recent regulatory change and will start taking applications for its new Citi Clear Card from today. The card, mainly aimed at students and other young adults, will have higher 28 per cent interest on rollover balances.
Citibank says the new plastic is unlikely to be instantly profitable. But it says the card will give it a head start in building relationships with young adults aged 18 to 35, so that it can later sell them other financial services when their careers are under way.
Parental consent is needed for applicants under 21 but the bank will not require their parents' income information. Citibank will also accept applications from older Singaporeans.
Still, industry insiders said university students will be the prime targets as they are more likely to embark on well-paying careers on graduation, becoming potentially lucrative clients.
Indeed, tertiary students were highlighted as a target group by the three local banks which are looking to launch similar credit cards soon.
Citibank's latest salvo in the local credit card market comes hot on the heels of a change in March by the Monetary Authority of Singapore to rules for unsecured loans. In line with a worldwide shift towards allowing banks to manage their own risks, banks in Singapore are now exempt from a long-standing salary criterion that has put credit cards out of the reach of 900,000 Singaporeans aged 18 to 54. The only catch is that the maximum credit they can extend to these customers is $500, a fraction of the typical limit of two months' pay.
This is not uncommon elsewhere. Students in the United States have long had access to credit cards with US$2,000 (S$3,030) limits.
'The opening of this segment has given us the opportunity to extend our reach to a new group of consumers,' said Citibank Singapore marketing director Ong Lay Choo.
The bank is focusing on the 500,000 young adults aged 18 to 35, who earn less than $30,000 a year. It is using its Clear Card brand, a standard card aimed at young professionals.
But it is not without cost. Virgin cardholders, some with no job or credit history, face a higher risk of default. So they will be monitored closely.
For instance, cards will be blocked instantly if the minimum monthly payment is not made on time. This differs from the standard practice where late-paying customers are slapped with a penalty but are able to keep using their cards without disruption.
The low credit limit also caps the amount of fees and interest that can be reaped from these customers.
Junior college student Sng Ren Zheng, son of a businessman, is keen to apply for a card after he turns 18 next month. 'I don't always have much cash on hand. A credit card will come in handy when I want to buy that $399 Hugo Boss shirt. If I wait for my $150 weekly allowance, the shirt might be gone.'
But university student Gabriel Tan, 23, said he is happy with the Visa debit card that he already holds, as it functions almost like a credit card.
DBS Bank consumer banking head Edmund Koh said the local bank stands to benefit most when it launches its own $500-limit credit card.
'Through POSB, we are already serving a base of mass-market customers. We know their savings behaviour which will reduce our credit risk. This allows us to offer this product at a lower cost,' he said.
OCBC credit cards head Wong Ting Mei said the bank will be launching a similar card aimed at tertiary students. University students offer an added bonus. Said an industry expert: 'Surely their parents will make sure they don't start off with a bad credit history, wouldn't they?' -
Does MAS aprove?
-
y 18years old want to wear hugo boss already?
-
Don't u see alot of 18yo-20yo wannabe trying to act all cool doning themselve in expensive stuff and hanging in clubs?Originally posted by pompy:y 18years old want to wear hugo boss already? -
be the boss= Hugo bossOriginally posted by boka:Don't u see alot of 18yo-20yo wannabe trying to act all cool doning themselve in expensive stuff and hanging in clubs?
-
I can forsee lots of parents gotta bail out tons of irresponsible kids...
sigh....if the govt approve this....then the country is dead...
To think that I worked hard to get my 1st card........ -
under 21 i think need parents approval. then the minimum age i think is 18.
-
actually debit cards r better. $500 is 2 little 4 some.
-
Seems something that is targeted at kids with little allowance but my parents probably won't do something stupid like this.
-
finally leh!
i have been thinking when can i own my first credit card..
hahaha...
will go find out more abt it.
students who are not earning their keep shouldn't be allowed to apply lah..
but hor.. bank wana earn more mah..
they heck care u got earning ability or not..
they earn the interest mah..
and nowadays children are so pampered by parents... anything can go to parents, bcos parents consented to it mah.
-
x2... surely willl happen... tink they should have a clause tat the parents are not responsible to repay the kid's debt... no $$$ then dun buy boss lo...Originally posted by Mid9Sun:I can forsee lots of parents gotta bail out tons of irresponsible kids...
sigh....if the govt approve this....then the country is dead...
To think that I worked hard to get my 1st card........ -
Smart move by the bank, because ultimately the parents will bail them out.
But a severe lack of morals. I cannot bring myself to agree with this rule, students should only be allowed to carry a debit card at the most. -
Humbug. It probably doesn't matter to people in Singapore, but it does to people in the US. Having a credit card opens doors to many new options, not least airline frequent flyer travel credit cards.
-
-
This is getting ridiculous. Why are we acting as if we have the right to tell people how to spend their money? If they freaking want to suffer, let them! This is simply PAP and their bloody minding of other people's affairs and the whole lot of you are spreading that around.Originally posted by me_a_clone:They are casting a net on a wide area hoping to get some fish.. as some mention parent will most of the time absorb the impact when the banks come after them and even with a higher interesdt rate it will not help at all as their mindset is already at, my parent will pay and it is ONLY $500/- nia..
Instead of pushing for such card maybe they should push for some teaching on that mindset -
for young adults is worth for their fiancial wise, as for kids, no no for me.....
-
ya right... after they get into debts?Originally posted by duotiga83:July 19, 2007
Parents slam new credit card scheme
By Claire Huang
SINGAPORE parents are alarmed at the recent launch of a new credit card that allows young consumers to apply even if they do not earn a single cent.
This new scheme by Citibank which kicked off yesterday is called Clear Card.
Earlier in March, the Monetary Authority of Singapore (MAS) changed its regulation on unsecured loans, thus allowing banks to come up with credit cards that need no minimum income.
Under the Clear Card scheme, consumers aged as young as 18 can apply for the card which allows a maximum monthly credit limit of $500.
The interest rate on rollover balance is 28 per cent, and is four per cent higher than the standard rate.
High interest rates whatsoever, some say they're all for it.
Secondary three student Lim Jun Shang says it's 'a good idea' and that now, he can 'spend money without thinking'.
Giving the thumbs up to this scheme is Justin Seah, also a student, who feels that although it may cultivate over-reliance on future money, it's handy to have a credit card.
But parents do not welcome the idea.
Mdm Virginia Ng, 50, says 'it's not right', as it means young adults will be able to spend money without first earning it.
But Citibank says this is the time for young adults to learn how to manage their finances.
Ms Alice Fok, Marketing Director of Citibank Credit Cards says as a parent herself, she feels that letting her children learn the intricacies in balancing their finances will benefit them in future.
And one regular Straits Times reader agrees.
Mr Leong Sze Hian, a financial professional pointed out that there is a tendency for young people to cultivate an 'easy spending' habit, but he's not stopping his 22-year-old daughter from applying for one.
'Sure go and apply, but you (his daughter) have to pay it when you use it and if you can't pay, you'll have to pay the interest also.
'No way am I going to bail you out. (I) Got to make that clear right from the start.'