HSBC’s Debt Consolidation Plan Review: Enjoy Low Promotional Interest Rates and Cashback
Consolidating all your outstanding unsecured debt under a debt consolidation plan (DCP) doesn’t mean the end of the road for you. In fact, it could usher in a new beginning. It could be a handy weapon against financial instability and an ever mounting debt.
With HSBC’s Debt Consolidation Plan, you may be able to lower your interest charges and become debt-free faster. Currently on the DCP loan applications which are submitted online and successfully approved, the bank is offering lower interest rates for a limited period and also other benefits such as processing fee waivers and cashback.
Hassle-Free Application Process, One of the Longest Loan Tenures: Can This Loan Solve Your Problems?
Frankly speaking, you may not be able to find an accurate answer to this question unless you find out about the features/benefits of this loan product. Here is a list of features/benefits that this DCP loan can offer:
Maximum loan amount: The borrowing limit will be the aggregate of the outstanding principals on your unsecured credit facilities, fees, and interest charges. For your first DCP loan, you’ll also receive an additional 5% allowance for incidental charges that may arise in between the time of loan approval and the time the loan is disbursed and reaches your creditors.
Minimum loan amount: The minimum loan amount has to mandatorily exceed 12 times your monthly income.
Convenient payment: Make a single, fixed payment per month to a single entity (HSBC in this case) instead of struggling to keep up with multiple payments to multiple creditors.
Revolving credit: Manage your expenses better with an HSBC Visa Platinum Credit Card that comes with a credit limit equal to your monthly income. You’ll enjoy all the privileges and perks available for regular cardholders. You’ll also enjoy an annual fee waiver on your card.
Competitive interest rates: When you switch to this loan product, you may be able to witness greater interest savings due to lower rates. This also means that you may be able to clear your outstanding dues much faster.
Loan tenure: Enjoy loan tenures from 1 year to 10 years with this loan.
Financial discipline: As you have to deal with one financial institution instead of many and make a single, fixed payment every month, you can make yourself more disciplined financially and also witness an improved cash flow.
Easy disbursal: Once your application is approved, money will be sent directly to your creditors for payment of the outstanding balances on the accounts you hold with them. You won’t have to go through the ordeal of making payments separately.
Automatic account suspension: As soon as your DCP loan is approved, your existing credit facilities will be suspended. HSBC will send out communications to your creditors. You won’t need to get involved.
Apply Now and Enjoy Promotional Interest Rates, Cashback, and Processing Fee Waiver
If you apply on or before 30 September 2018 and your application is one of the first 500 applications to be successfully approved by 31 October 2018, you’ll enjoy the following promotional interest rates:
Nominal/Flat Interest Rate
Effective Interest Rate (EIR)
1 year to 7 years
8 years to 10 years
In addition, on applications submitted by 30 September 2018 and successfully approved by 31 October 2018, the bank will also offer a full waiver of the processing fee. Currently, the fee is 1% of the approved amount, subject to a minimum of S$88.
Also, you’ll receive cashback worth S$100 provided you satisfy all the following conditions:
You apply online by 30 September 2018.
You receive approval from the bank on or before 31 October 2018.
You agree to receive promotional/direct marketing messages from the bank.
The money will be credited to your savings account with HSBC, opened upon approval of your DCP application, within 3 calendar months. If you cancel your loan account or make an early repayment of the outstanding balances on your loan account within a year of approval, you’ll have to refund the cashback to the bank. This is based on the assumption that HSBC had credited the amount to your savings account. If the bank determines that your loan account hasn’t been maintained in good standing during the promotion period or at the time of credit, it may decide against awarding the cashback.
Enjoy Affordable Interest Charges Even After the Expiry of the Promotion Period
If you’re wondering how far your interest liability is going to increase once the current promotion ends, here’s a snapshot:
Nominal/Flat Interest Rate
Effective Interest Rate (EIR)
The flat interest rate shown in the table is for reference only and can be different at the time of application.
The flat rate is calculated based on a front-end, add-on method.
Your total interest = loan principal x loan tenor x nominal interest rate.
EIR, in this case, includes a one-time processing fee.
EIR is computed using the reducing balance method.
Interest is charged on a daily basis.
Let Us Illustrate
Let us assume that you have identical unpaid dues of S$3,000 on a credit card, line of credit, and an instalment loan. Let us also assume that you have to make a monthly payment of S$500 on your card, S$600 on your line of credit, and S$300 on your personal loan. Let us further assume that interest is charged effectively at 25.4% p.a. on the card, 15% p.a. on the credit line, and 15.43% p.a. on the term loan. So, your total outstanding due is S$9,000, you have to make a monthly payment of S$1,400, and your interest charges for 1 year is S$1,674.90. If you were to sign up for a 7-year DCP programme from HSBC that charges an EIR of 7.5% p.a. and contrast it with your existing loans, you’ll notice the following differences:
The loan amount is S$9,400 instead of S$9,000.
You’ll have to repay S$144.18 per month against S$1,400 under the previous arrangement.
The total interest charges payable over the 7-year period is S$2,711.10 as opposed to S$1,674.90 payable over 1 year.
The following deductions can be made immediately:
Interest payable for 1 year under the debt consolidation arrangement will be S$387.3 (=2,711.10/7).
Your annual savings will be S$1,288.66 which means that you’re basically saving 77% (approximately).
We have taken the help of the loan calculator available on the bank’s website for this illustration.
The results shown here could be different from the actual results.]
Important Fees and Charges That May Apply to Your Loan
1% of the approved amount, subject to a minimum of S$88
5% of the amount prepaid
2.5% in addition to the prevailing interest on the unsettled amount
You may also have to pay the following fees on your card:
A minimum monthly due.
A finance charge on the borrowed amount.
A late fee if minimum payment is not made on time.
Additional interest charges if minimum payment isn’t made on time.
An annual fee charged every year. Currently, however, you’ll enjoy an annual fee waiver on your HSBC Visa Platinum card.
Keep in Mind: Partial consolidation Isn’t Possible
Partial consolidation of your unsecured debt isn’t possible.
You can only apply for this programme if the total unsecured debt is 12 times your monthly income.
If you’re a foreigner residing in Singapore but don’t have a PR status, you won’t be eligible for this programme.
The interest charges, after the expiry of the promotion period, would revert to the prevailing interest rates.
Once you decide to take up a DCP loan, you won’t have any access to your existing credit facilities.
If your outstanding debt exceeds the approved loan amount, you’ll be liable for its repayment.
You can only apply for new credit facilities with HSBC if your balance-to-income ratio across all financial institutions, falls below 4 times your monthly income.
Records of all transactions in relation to this programme will appear on your credit report for 3 years after you close the account.
If you stop making payments on your existing unsecured credit facilities or an existing DCP arrangement from the time you apply for a DCP loan or submit your refinancing application respectively (until loan approval), you’ll be liable for default interest charges and penalty charges.
You’ll be responsible for terminating any GIRO arrangement or standing instructions that you may have in relation to your existing credit facilities. You may also have to set up new payment channels in agreement with the respective billing organisations until the approval of your loan.
You can’t apply for a temporary credit limit increase on your revolving credit facility even if you have a genuine financial emergency. If your income, however, increases during the period, you may apply for a permanent increase. Don’t forget to submit proof of income increment.
Do You Satisfy the Eligibility Conditions for This Loan?
Before you submit your application through your preferred mode, make sure that you meet the following criteria:
You’re a Singaporean or permanent resident.
Your annual income should be anywhere from S$30,000 to S$120,000.
Your balance-to-income ratio i.e. the ratio between the outstanding balance on your unsecured credit facilities and your monthly income should be greater than 12.
To learn more about the general HSBC personal loan criteria, click here.
You’ll also have to submit the following documents to get your application processed:
If you’re a commission-based earner or if you’re self-employed, you can provide NOA documents for the last 2 years for income verification/validation purposes.
Want to Apply? Here Are the Various Application Modes Available
In order to submit your loan application and supporting documents, you may choose any one of the following modes:
Enjoy a hassle-free experience by applying directly on our website.
You may leave your contact details with the bank. A representative might get in touch with you.
For any application-related assistance, you can call the bank’s dedicated hotline.
You may also walk into an HSBC branch and apply.
Want More Information? Try This Section
Q. If I am already under the RAS scheme, am I still eligible for this HSBC debt programme?
A. Yes, you are. Outstanding balances that you may have under the RAS scheme will be transferred to your DCP loan account after approval.
Q. Are there other banks in Singapore that provide a similar product?
A. Yes. There are 13 participating financial institutions in Singapore that offer DCP loans. HSBC is one of the 13. The other banks UOB, RHB, Standard Chartered Bank, BOC, CIMB, DBS, Citi, American Express International, Diners Club Singapore Pte Ltd, ICBC, Malayan Banking Berhad, OCBC
Q. Can I cancel the debt consolidation facility after my application has been approved?
A. No, you can’t. Once your application has been approved, you won’t be allowed to dissolve your DCP loan account.
Q. Can I apply for this HSBC loan if I already have a DCP application pending with another lender?
A. No, you can’t. At any point in time, you can have one and only one DCP loan account.
Q. When will I get my HSBC card?
A. Usually, you would get it within a week of your loan approval.