SINGAPORE : Citibank is seeking to tap into a new market for growth in its credit card business in Singapore.

It has become the first lender to offer plastic to those with an annual income of less than S$30,000.

While there is no minimum income requirement, applicants for the cards will be subject to tight credit screening processes.

Previously, credit cards were beyond the reach of people earning less than $30,000 a year.

But the rules were relaxed earlier this year - allowing card issuers to grant unsecured credit below S$500 to this group.

"Based on our research, customers who are aged between 18 and 54 years old, earning below $30,000 per annum, that's about 900,000 customers in Singapore. For that group, for our Citi Clear Card, we're planning to (target) about 50% of the segment," said Alice Fok, marketing director of Citibank Credit Cards.

The card, targeted at young adults aged 18 to 35, has a credit limit that's capped at S$500 a month.

Those aged below 21 years of age will have to seek parental consent before applying.

The low credit limit may pressure profit margins, but Citibank said the new card will open access to the nascent pool of upwardly mobile young professionals.

"With that limitation, the profitability for the immediate return will be relatively low, but we believe we can grow the customers and build a long-term relationship with them, so that in the future, profitability will increase," explained Fok.

With lower income comes higher risk of default.

Hence, Citibank is introducing new measures to guard against default risk, including a 28% interest rate on its new credit card, higher than the 24% on its other credit cards.

The lender also said it will suspend usage of the credit card for customers who fail to make the monthly minimum payment.

It will also undertake to educate first-time customers on how to manage credit spending.

Channel NewsAsia understands that OCBC is also planning to roll out a new credit card, targeting tertiary students. - CNA /ls