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An easy way to improve cash flow in life.

Friday, August 1, 2014

It is a strange fact of life.

If we are poor and need some financial assistance, generally, the banks wouldn't want to lend us any money. When we start showing signs of being able to make some money on a sustainable basis and possibly no longer need financial assistance, the banks will want to lend us money.

I don't know about you but I have received so many cheques from banks in the last few years for amounts between $5,000 to $10,000 that I have lost count. They are practically stuffing money in my face. All I had to do was to bank in the cheques and the money would be mine to use. So good of them, right?

More recently, I got an OCBC 360 account and since one of the conditions to get more interest income is that I must charge $400 to an OCBC credit card each month, I applied for the cheapest available card, the OCBC Frank VISA card. A friend who found out told me that the card is for young graduates who just joined the workforce and not for established old gits like me who are making more money. Really? Look at the credit limit they have given me!

It is ridiculous! I have never had such a high credit limit for a credit card ever! No, my earned income has not had any increase in the last few years. In fact, it could have declined. Such is my life. My last credit card application approved by Citibank only had a credit limit of some $14,000. So, I guess OCBC is trying to encourage me to spend more money and, perhaps, even to take my time to pay them. OK, they are not being ridiculous. They are being nice to me. My apologies.

Take my time to pay them? Yes, of course. It is not just OCBC as, generally, the banks are very understanding about how we might not be able to pay in a timely manner.

Tell you a secret, if I could lend anyone money and charge an interest rate of 18% to 24% per annum, I wouldn't be bothered to invest for income in the stock market! "Lending for income", in this case, sounds like a better deal. Don't you think so?

Of course, to regular readers, this is not a new topic in my blog. I have blogged about it often enough and from various angles. I was encouraged to blog about it again by a friend who shared an article with me last night:

"33-year-old is an honours degree holder and a white-collar professional. He estimates that he has paid out about S$70,000 in interest over two years on his original loan amount that was S$20,000. He has been forking out S$4,000 a month, or 88 per cent of his take-home pay, to pay interest on a loan he took from a licensed moneylender.

And it all started because:

"The banks kept on sending me invitations to sign up for credit cards, and at one point, I was using 10 different credit cards. I lost track of my spending,” he said."

Read the full story here:

So, what is the moral of the story? We need to learn a secret and it is the secret to avoiding financial ruin.

Together with the two related posts below, publishing this blog post means that I have given proper acknowledgement to all the three local banks in their efforts to help improve my cash flow.

Now, who says that AK is not impartial? Who? Who?

Related posts:
1. Extra cash for better control of your finances.
2. Get on top of your finances.


Patrick T. said...

When my wife qualified for a credit card about 5 years ago after attaining the "minimum requirements". Immediately, they gave her credit limit that is 3x of mine (which was first given 15 years ago).

Easy money!

For the banks!

AK71 said...

Hi Patty,

I don't know how the banks calculate credit limits these days. Seriously.

I thought MAS has a guideline on this. The cap is twice of monthly salary or something. It seems that this is no longer the case. -.-"

la papillion said...

I had two citi bank credit cards, sent to me with a credit limit of $21k EACH!

They are nuts!

AK71 said...

Hi LP,

I think that is the combined credit limit. We can have 10 cards from the same bank but one combined credit limit.

Having said that, congratulations on your home tuition business! You must be doing very well! Huat ah! :D

AK71 said...

Hi LP,

I like your comment in FB. I cut and paste here to share with everyone. Let me know if you object to this. ;p

"it's easy to say that they shouldn't do this and they shouldn't do that. But perhaps even if you educate them before they commit such things, do you think they will listen? I'm not so sure...I mean if he wants to find out about debt and personal finance, it's all out there for him to find out right? Think about our own prudence in financial matters...did something teach that to us? Did we learn it from school? More likely than not, it's financial disasters that that happened to ourselves or our family (that we are recovering or we had recovered) that make us wake up from financial stupor. What i'm saying is, some mistakes cannot be avoided. You can remind, you can educate, but you need to experience it to learn. I'm very sure his children and his close frends/relatives will learn from his mistakes. In a weird utilitarian sense, he did more good than bad to the world."

Singapore Man of Leisure said...


That's why since biblical times, usury is BIG business!!!

The shadow banking in China is even more POWER!

I learned a bit how some of our suppliers were surviving on such razor thin margins selling to us. Oh! Money shuffling!

As a buyer I don't mind!

AK71 said...


The money lenders got it right, then. I am in the wrong industry. -.-"

In fact, I am probably investing in the wrong stuff too. OMG! -.-"

la papillion said...

Hi AK,

Nah, no objections, go ahead and 'borrow with pride' ;)

The 21k limit could be combined, yes. I never tested it out before, neither do I intend to do it lol
Definitely nothing to do with my income...I'm very sure they arbitrary put in some times. These two credit cards is through cold call, so I didn't even fill in forms. Strange that they let me have 2 cards, when those cards that I actively applied rejected me outright.

Regarding the comment on fb, I said that because often times, we see ourselves as sages advising people, not knowing that sometimes our advice are not actionable, or not dispensed at the right time. I've let to let go and let things happen when it's meant to happen.

Some things just cannot be rushed. Everything in its own time and place.

AK71 said...

Hi LP,

Oh, yes. I only learn from the best. Borrow with pride. I only share the best too. ;p

I am surprised that Citibank could do something like this. No forms to fill up and no documents to furnish? Wow. Something isn't right here. Hmmm... -.-"

Yes, all in good time. Although this is something I like saying too, there are certain things in life which should be avoided, if possible.

Sometimes, an experience could be so devastating that a person never recovers from it. For every story of rags to riches, I think there are many more stories of people who are clothed in rich looking rags for life. -.-"

la papillion said...

Hi AK,

Agree. Some experience will scar you so much that you just never recover. But those that didn't, you just grow to avoid.

Ironically, those that couldn't save themselves end up with their stories being told again and again by generations, to remind their younger ones not to do such a thing. It's tragic for the person, but not for the community at large.

I remembered that when I first get my atm card (not even credit card), I was very cautious. By then, I had heard plenty of stories of unwarranted spending and wastage. By the time I had my credit card, I had heard even more. That's how I learned not to bust my credit limit and always pay on time. Back then, I wasn't persuaded by the mathematics of the immense interest generated by such debt. It's always the stories that warned me, that I remember for life.

Who created these stories? Unfortunately, it's those very same person who got buried by debt that will serve as a warning to future generations.

Everything comes full circle.

AK71 said...

Hi LP,

Yes, we should learn from experience, both ours and other's.

Sigh, there will always be business for the School of Hard Knocks. That's for sure. -.-"

pf said...

2 cards on same account/statement? 21k might show separately. But it is an overall limit.

pf said...

Sometimes marketers fill in on your signed form.

pf said...

Did u use cpf or iras tax notice to prove income?

AK71 said...

Hi pf,

A forensic accounting expert is stalking me in FB. I am going to clam up from now. -.-"

pf said...


If u use ur cpf, there is a cap of 5k for contribution. So, banks wld only use 5k to grant the credit limit.

If u use iras income tax, it wld be full income including ur dividends for them to calculate the credit limit.

Unknown said...

I must say UOB is the most aggressive of the lot.

If only i can paste a picture in this comment section. UOB gave me a credit limit of S$60,000 and that is NOT 2-3 months of my salary.


AK71 said...

Hi JW,

Wow! Your fairy godmother must be working in the UOB Credit Card department! Really? $60,000 credit limit?

You must be making $15,000 a month! Must be the case! Don't bluff! ;)

pf said...

Btw, just to clarify ur blog post seems to suggest that easy way to improve cash flow is to borrow money.

Is that what u mean?

AK71 said...

Hi pf,

I like to think of this blog post as a piece of art or poetry. It would be appropriate, therefore, for me to leave the blog post open to interpretation and not be overly concerned with dogma to do with financial prudence.

Wah! So cheem! You say leh? ;p

pf said...

Huh...sorry.i can't catch the poetic angle.

Just confusion.

AK71 said...

Hi pf,

"Confusion is a common response to challenging, abstract, and complex works..."
Paul J. Silvia
in "Confusion and interest: The role of knowledge emotions in aesthetic experience."

ROFL. ;p

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