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Overspending on Credit

Nicholas is 38 years old and an Executive. He earns an income of $52,500 a year and owed a total of $93,000 to 8 creditors. The main cause of indebtedness was due to overspending on lifestyle.

The interview:

CCS : Why did you decide to apply for and use credit card?
Nicholas : I had applied in 2006 when I started earning a salary and could qualify for it.

CCS : How did you feel when you first used the credit card?
Nicholas : I had the mindset of “buy now pay later” and was spending without limitation by charging constantly to the credit card.

CCS : How did you realise you may have a credit card debt problem?
Nicholas : I was paying the minimum amount billed to me while continuing my credit card usage. As the amount owed kept increasing, I then applied for more credit cards to support my spending and to pay bills. I ended up having 8 credit cards!

CCS : How did you feel when you realized that you have a credit card debt problem?
Nicholas : I felt lost and did not know what to do. I tried using my bonus to reduce the total amount owed but the reduction effect was minimal.

CCS : Did you share your debt problem with anyone?
Nicholas : No, I kept the debt problem to myself.

CCS : What / who prompted you to seek assistance from CCS?
Nicholas : I was referred to CCS by UOB. I felt hesitant at first but decided to try after its officer spoke to me a few times to explain about Debt Management Program.

CCS : One of the main reasons cited for your debt problem was lifestyle spending, please share how did you overspend on it?
Nicholas : I signed up for a 5-year gym membership and engaged personal trainer. It cost between $3,000 to $4,000 for 30 sessions. While I achieved my aim of becoming physically fit, I also owed a high credit card debt in the end.

CCS : How did you manage to make yourself stick to the repayment arrangement?
Nicholas : I followed CCS’ advise closely. When I receive my salary at the end of each month, I put aside the repayment amount and pay the banks by due date in the following month. Also, all my credit cards were terminated. This forced my spending to stop, so I just focused on paying back what I owed. Nowadays, I spend carefully and even manage to save enough to pay some banks earlier than planned.

CCS : What do you intend to do with the monthly installment amount after you have completed your DMP?
Nicholas : I will not apply for credit cards anymore. I plan to save the money and placed in fixed deposit to earn interest, or I might invest in unit trust.

CCS : Please share a word of advice to people who are facing a debt problem.
Nicholas : They should approach CCS to work out a Debt Management Program as it helps one to manage monthly cashflow and make fixed monthly repayment.

An interview with a CCS Client – This is the fifth of a series of interviews conducted with Credit Counselling Singapore’s (CCS) counselled clients on our Debt Management Programme. 

Profile of the client is presented based at the time the person approached CCS for assistance, which could be as recent as a few months ago or several years ago.  Name of the interviewed client has been changed. 

These interviews will be published on the 3rd Friday of the month.

Credit Counselling Singapore

Published 18 November 2022.