FIs to be allowed to issue credit cards to individuals above 55 years of age who meet any one of the following criteria:
(a) annual income of at least S$15,000;
(b) total net personal assets exceeding S$750,000⁵ ;
(c) guarantor with annual income of at least S$30,000.⁶
Why is MAS allowing individuals above 55 years old to obtain credit cards based on assets and guarantees?
Prior to Dec 2013, individuals above 55 years old needed to have annual incomes of at least S$15,000 to qualify for credit cards. However, this requirement posed difficulties for retirees who did not meet the minimum income criterion, even though they were financially secure.
In recognition that credit cards are a convenient payment alternative, and to better cater to the transactional needs of retirees, MAS has provided more alternatives (i.e. (b) and (c)) for retirees to qualify for credit cards. To balance this against the overall social objective of protecting individuals from spending beyond their means, this increased flexibility is limited to financially secure retirees who meet at least one of the qualifying criteria mentioned above.
Regulatory credit limits are also in place to ensure that retirees do not borrow beyond their means. Where a card is issued to a retiree based on his income or net personal assets (i.e. (a) or (b)), the regulatory credit limit is 2 months’ income if he has an annual income of less than S$30,000, and 4 months’ income if he has an annual income of at least S$30,000 but less than S$120,000. Income can include non-employment income such as rental income.
Where a card is issued to a retiree on the basis that he has a guarantor with an annual income of at least S$30,000, the maximum credit limit of the guaranteed card is based on the guarantor’s income.
⁵ The term “net personal assets” refers to the total value of the individual’s assets less his liabilities. Assets should be substantiated by documents provided by the borrower. In addition, lenders should take reasonable steps to ascertain the liabilities of the borrower, including by obtaining a written declaration from the borrower.
⁶ A guarantor who is a Singapore citizen or permanent resident is required to have an annual income of at least S$30,000.