PRE-APPROVED CHARGE AND CREDIT CARDS

[Mr Speaker in the Chair]

Mr Chng Hee Kok asked the Minister for Finance if he will discourage banks and other financial institutions from issuing pre-approved charge and credit cards.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, I agree with the Member that the issuance of pre-approved charge and credit cards should not be encouraged. The Monetary Authority of Singapore (MAS) has sent out a circular to all card issuers in Singapore at the end of last week directing them not to issue credit or charge cards to any person unless he has applied for it in writing.

Only one bank has actually sent out such cards. Under their scheme, pre- approved cards were mailed to selected existing cardholders who already qualify for credit and charge cards under MAS' guidelines on credit and charge cards. The pre-approved cards offer access to a range of new services but the cardholder's credit limit granted by the bank remains unchanged. Although the bank's pre-approved card scheme does not raise the cardholder's capacity to spend, such aggressive marketing of credit cards will pressure other card companies to respond by offering better credit terms and some have already done so. A proliferation of such practices will eventually lead to imprudent spending and increased defaults.

I would like to assure the Member that the Government shares his concern and the practice of issuing pre-approved credit and charge cards has been stopped in Singapore.