I APPLAUD the efforts of Focus on the Family Singapore to teach young parents how to analyse their budgets and to give them tips on how to remain debt-free in 'All ears at financial-management talks' (my paper, March 17).

Consumers have to be prudent with their spending and not be enticed by the many advertisements for unsolicited loans offered by banks.

Banks are profit-oriented entities and, like any other business, their main interest is in pushing their products and services, such as loans and credit cards.

Recently, the Monetary Authority of Singapore lowered the annual income requirement for unsecured loans from $30,000 to $20,000, subject to a credit- limit cap of twice a borrower's monthly income.

I have held a credit card since 1981.

Over the years, I have been offered unsolicited loans on many occasions, even in difficult economic times.

Whenever a big purchase appears in my credit-card statement, a letter soon follows asking me to convert the amount to a loan without first checking on my payment patterns.

I always pay my bills in full and on time.

A year ago, my credit card was upgraded to a platinum one, without any prior checks made of my financial status.

I declined the upgrade.

My employment and income status have changed over the years and I am now a retiree. A higher annual income is required to be eligible for a platinum card. It also attracts higher subscription fees.

The bank was interested only in collecting a higher subscription fee while compromising on checks of customers' credit worthiness.

Late last year, I was offered an unsolicited loan by the bank, which offered me a free watch if I were to cash a cheque from the bank for a loan of $6,000 with 0 per cent interest for six months.

However, there would be a one-time non-refundable processing fee of 5 per cent. Thereafter, interest at the prevailing rate of 24 per cent per annum would apply.

From my experience, it seems banks do not sell their products and services sensibly and help customers curtail overspending. Thus, the dictum of caveat emptor applies.

Consumers should take responsibility for their financial affairs and live within their means.

Be disciplined and resist the temptation to overspend.

Be prudent about accepting unsolicited loans so as to avoid falling into a debt trap during bad economic times.

Mr Chin Kee Thou

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