By Lorna Tan

HERE are some tips on managing credit card debt from the Credit Counselling Singapore (CCS), a non-profit group that advises debtors.

How should consumers manage such debt?

Consumers should view their credit cards as a means of payment and not as a credit facility. They should pay in full and on time to avoid heavy interest charges.

Should consumers use their credit cards to pay for big-ticket items?

If they have the funds to pay for the item, they should by all means use the credit card as often as possible to get a discount or points, or even an interest-free repayment plan over 12 or 24 months.

The caveat is that the consumer must have the ready funds available to make payment in full or to meet the repayment instalments, said CCS president Kuo How Nam.

What are the options if a consumer has already chalked up a substantial amount of credit card debt and he loses his job?

Some banks do have debt relief plans for distressed debtors but this will still require that the debtor has some income and debt repayment capability.

If he still has some savings, it is possible to offer them as a partial payment and close the matter. This option may be feasible with one bank but not if he has debts with more than one institution.

If the debtor has no job, income or savings, there may be no other choice but to wait for the creditors to take legal action, which may include bankruptcy.

If the consumer is deep in credit card debt and has difficulty meeting the minimum sum required but still holds a job, what should he do?

As long as he holds a job and has some income, it is possible to suggest a repayment proposal to his creditors. Assuming he has credit card debts with more than one bank, from our experience, it is very difficult for an individual to handle these negotiations in a multi-creditor situation. This is where CCS comes in.

CCS has a debt management programme with the banks. If a customer is suitable for a debt management programme, we will write to all his unsecured creditors to explain the individual's financial situation and make a proposal to all his unsecured creditors for repayment of all his unsecured debts over a number of years.

CCS acts as a facilitator and negotiator for the debtor. This is a win-win situation as the debtor gets some breathing space and time to pay off his debts in a sustainable manner and the creditors will eventually get back their money.

This article was first published in The Straits Times on November 03, 2008.