Consumer Insights

What Happens When You Only Make Minimum Payment on Your Credit Card?

Aug 23, 2026

Paying the Minimum Is Not the Same as Clearing Your Debt. In Part 1, we looked at what happens when you close a credit card. But many cardholders choose another path. They keep the account open and make only the minimum payment on their credit card every month. The minimum payment on most credit cards in Singapore is typically 3% of the outstanding balance or $50, whichever is higher.

While paying the minimum prevents immediate late fees and avoids immediate default status on your Credit Bureau Singapore (CBS) report, the remaining 97% of the unpaid principal continues to accrue compounding interest at standard bank rates of 26.9% to 28.9% p.a. calculated daily. Over time, interest charges overtake the original principal, creating a severe debt spiral where the borrower pays significant sums without reducing the actual debt balance.

What Happens to Your Credit Report When You Cancel a Credit Card?

Aug 20, 2026

Should You Cancel a Credit Card to Avoid the Annual Fee? You receive your credit card statement and notice an annual fee. You request a waiver, but the bank declines. So you decide: "I'll just cancel the credit card." This is common among Singapore consumers, but canceling an account alters your credit report in two critical ways:

1. Average Age of Accounts: Closing your oldest card shortens your overall credit history length, which credit scoring models interpret as less stability.
2. Credit Utilization Ratio: Cancelling a card immediately removes that card's credit limit from your total available pool. If you maintain balances on other cards, your aggregate credit utilization ratio spikes upward, which can drop your Credit Bureau Singapore (CBS) score from Grade AA to BB/CC.

Financial Gap: Understanding When Borrowing Makes Financial Sense

Aug 15, 2026

What Is a Financial Gap? Borrowing is often associated with financial difficulty. When an individual or business needs a loan, it is easy to assume they simply do not have enough money. But a shortage of cash today does not necessarily mean someone is financially troubled.

A genuine financial gap occurs when a business experiences a timing mismatch between paying expenses (such as upfront raw materials, project mobilization costs, or tax commitments) and collecting customer receivables. Borrowing makes sound financial sense when the Return on Capital Employed (ROCE) generated from deploying the loan proceeds exceeds the Cost of Capital (Interest Rate).

Factors That Affect Your CBS Score

Credit Bureau Singapore (CBS) collects credit data from all major retail banks and financial institutions in Singapore to generate an individual risk score ranging from 1,000 (HH - Default) to 2,000 (AA - Lowest Risk). The primary factors driving your score include:

• Utilization Pattern: High revolving credit card usage relative to your credit limits.
• Recent Credit Inquiries: Submitting multiple loan applications to multiple banks within a short window triggers hard inquiries, signalling financial distress.
• Repayment History: Timeliness of monthly settlements over the trailing 12 months.
• Available Credit: Aggregate unsecured credit facilities open relative to annual income.

Debt Ranking in Singapore: Who Gets Paid First and Last?

In corporate insolvency and personal debt restructuring under Singapore law, creditors are ranked by statutory priority:

1. Secured Creditors: Fixed charge holders over specific real estate or titled machinery.
2. Statutory Preferred Debts: Employee wages/CPF contributions and government taxes (IRAS).
3. Floating Charge Holders: Creditors holding debentures over general inventory and floating assets.
4. Unsecured Creditors: Trade suppliers, unsecured bank working capital loans, and personal credit lines.
5. Subordinated Creditors & Shareholders: Equity capital holders and director advances.