No minimum pay needed for new credit card
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.
Going on Clear Card
# Credit limit: $500
# Minimum age: 18 (parental consent required if below 21)
... more
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?'
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.
Going on Clear Card
# Credit limit: $500
# Minimum age: 18 (parental consent required if below 21)
... more
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?'
posted by Alex at
11:45 PM
0 Comments:
Post a Comment
<< Home