POSB Debt Consolidation Plan

    POSB is one of the oldest banks in Singapore that has been in continuous operation. The bank is now a subsidiary of DBS and offers a range of affordable banking products to its wide consumer base. Products range from deposits to unsecured loans.

    The POSB Debt Consolidation plan is one of their unsecured loan products which offers borrowers a chance to consolidate outstanding unsecured loan balances from one or more banks into one loan with a fixed monthly instalment at a lower rate of interest.

    Features and Benefits

    The features of the POSB DCP are as follows:

    • The debt consolidation loan consolidates all outstanding unsecured loan balances of the borrowers into one loan with a fixed monthly instalment making it easier to pay.
    • Since the borrower will have to pay only one instalment and not have to worry about varying due dates and multiple instalments, it gives the borrower better control of their finances.
    • The POSB debt consolidation plan offers a loan at a much lower rate of interest allowing borrowers to not only clear off their loans faster but also save considerably on the interest they pay.
    • The borrower can choose from a range of tenures of up to 8 years providing them a greater degree of flexibility.

    Interest Rate

    The POSB DCP offers a maximum tenure of 8 years. The bank charges a flat rate of interest of 4.58% p.a. with an Effective Rate of Interest or EIR starting as low as 8.22% p.a. The EIR is inclusive of various incidental charges such as processing fees. While the plan offers a fixed monthly instalment, the principal and interest component of the instalment varies throughout the tenure.

    How the POSB DCP Works

    Assume the borrower has 3 lines of outstanding unsecured debt from 3 different banks with each being a credit card balance of S$10,000. Assuming the interest charges of this is 26% p.a., the borrower would be paying an interest of S$7,800 a year or S$46,800 for a tenure of 6 years. The borrower will not only have to manage multiple payments and varying due dates, but the total amount they would be paying monthly will also be quite high.

    If the borrower went in for POSB debt consolidation loan, the interest charged would be 8.22% p.a. bringing the total interest payable in one year to S$2466 or S$14,796 for a tenure of 6 years. As we can see, the savings on interest alone is substantial not to mention, the monthly instalment will also be much lower.

    The above example is a simplified illustration. Actual instalment amount, interest to be paid and other numbers will vary based on the amount of outstanding balances the loan amount taken, tenure chosen, and the interest rate offered.

    Eligibility Criteria

    • The borrower must be a Singaporean citizen or a Permanent Resident.
    • The borrower must have attained the minimum age of 21 years.
    • The borrower must have a minimum annual income of S$30,000.
    • The borrower must have a minimum annual income that does not exceed S$120,000.
    • The borrower must have a total outstanding balance greater than 12 times their monthly income.

    Documents Required

    The applicant must provide the following documents at the time of application:

    • A front and back copy of their NRIC
    • A copy of their most recent Credit Bureau Report
    • Salaried employees must provide income documents such as CPF contribution statement for the past 12 months, latest computerised payslips and the latest Income Tax Notice of Assessment.
    • Applicants who are working on variable or commission basis must provide income documents such as CPF Contribution and 2 years Income Tax Notice of Assessment.
    • The applicant must submit the most recent credit card statements or other relevant documents showing their outstanding balances.

    How to Apply?

    Borrowers can apply for the POSB DCP through the following ways:

    • Online: Borrowers can visit the POSB website, go to the Debt Consolidation Plan page and go to the ‘How to apply’ section. Here they have the option of leaving their contact details following which the ban will reach out to them and initiate the application process.
    • Offline: Borrowers can walk into their nearest POSB branch and request for the debt consolidation loan application.


    1. What is the additional 5% allowance for?
    2. The additional 5% allowance is provided to cover any incidental charges from the time the DCP loan amount has been approved to the time the loan is disbursed. Incidental charges may include interest rates, late payment fees etc.

    3. Can the debt consolidation plan amount be used to pay the outstanding balances partially?
    4. No. The debt consolidation loan will be disbursed directly to the banks with which the borrower has maintained an outstanding balance. The loan amount will not be given to the borrower.

    5. Can one apply for multiple debt consolidation plans?
    6. No. At any given point of time, a borrower can hold only one DCP regardless of which financial institute they have taken it from.

    7. How can one increase the credit limit on their revolving credit line?
    8. The credit limit can only be increased if the borrower has had an increase in their monthly salary. Borrowers must submit relevant income documents showcasing increase in monthly salary to have their credit limits raised.

    9. Can a renovation loan be put under the debt consolidation plan?
    10. No. only unsecured lines of credit such as credit cards or personal loans can be consolidated under a debt consolidation loan.

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