Use your Credit Card wisely

1 person can hold more than 1 credit card. Each card could be double or tripple the person's monthly salary. Do we really need so many cards?

Nowadays, we are in this digital world, whereby the usage of e-cash (i.e. credit card and debit card) is very popular. Many of us will use our e-cash to purchase our groceries, petrol, food & beverages, clothes, and even order our goods and services online! The popular online shopping paradise including, Ebay, Amazon and AirAsia…

For me, I hardly buy my goods online. However, I will charge my credit card when booking air tickets online. This will eliminate the hassle of withdrawing cash and book the ticket through travel agents. On top of that, I also use my card in the petrol station. Hence, I only need to pay at the pump and do not need to walk to the counter and pay. Hehehe!! Besides saving time, I also can earn extra points! =p Those points allow me to redeem for free petrol voucher!! Consumer yang bijak, kan? kekeke!

Well, according to The Associations of Banks in Malaysia, only about 30 percent of credit cardholders pay the amount outstanding in full. In other words, most of the credit cardholders only settle their debts partially or only pay for the interest and the minimum amount of the principal outstanding. In this case, I am very proud to be one of the 30% credit cardholders in Malaysia. =p

I believe, we should not spend more than what we can afford. Credit card is merely a tool that gives us convenience in purchasing stuffs and we should think of whether we can afford to pay off the debts in the future. I’m quoting this ABM’s example, a credit cardholder who were to elect only to pay the minimum 5% of the amount outstanding on a RM10,000 balance. With a credit card charging 18 percent per annum, it would take 7 years and 3 months to pay off the amount owed assuming no more charges are added to the card. This is very scary right?

So, I would like to share some tips from the Agensi Kaunselling dan Pengurusan Kredit (AKPK), for handling credit cards wisely:
1) Use the credit card as a means of payment and not as a source of long term credit.
2) Keep only one or two cards.
3) Charge only what you can afford to pay back – avoid living beyond your means.
4) Shop around for the best interest rates, annual fees and service fees (there are a few banks offering a “no frills card” at lower interest rates. These cards do not attract the annual and joining fees nor enjoy insurance coverage and/or reward schemes).
5) Pay off the debt each month, or at least pay more than the minimum if one elects to pay in instalments.
6) Avoid withdrawing cash advances as there are charges involved.
7) Remember that a credit card is NOT the same as free money (credit cards must nevertheless be kept in safe custody to prevent theft and fraud).

Additional tips:
So far I know Maybank and CIMB are offering ‘Free for life’ credit cards: (1) Maybank Petronas Visa Card, and (2) CIMB Petronas Master Card. Check them out and save some annual fees… =)

*Cheers*