With the rising cost of living around the world,
Financial commitments of the working community seem to just increase consistently.
If you have a tertiary education,
Chances are you have a ballooned student debt – some even have more than one.
When you are working,
You have the monthly commitments of your house – be it your own or a rented place -, car or motorcycle, personal loans if any,
As well as other commitments such as household expenses as well as supporting your family members.
If you are married and have kids,
Your budget for other commitments listed above might also be larger than that of those who are single.
Many people manage these commitments by using credit cards.
In fact, in Malaysia, it is the most widely used payment card in the past decade,
According to Bank Negara Malaysia.
Just in the past 10 years or so,
Malaysia recorded an average of 349 million credit card transaction took place annually.
But credit cards could be tricky and you should first equip yourselves with the basics of the system before you consider applying for it.
There are also instances where some people receive complimentary cards but have no intention to use them,
Or just do not want to continue using their cards.
For all of you, we have a solution.
In this entry,
We show you the basics as well as a simple user guide to learning, knowing, using as well as cancelling (if there is ever a need) of credit cards.
We’re hoping this article will help you learn the usage if credit cards in Malaysia as well as assist you in making sound decisions to further enhance your financial status as well as improve your lifestyle.
This article only serves as a guideline and should not in any way be taken as legal advice for any credit card application of transaction.
BNM defines credit card as “a designated payment instrument which indicates a line of credit or financing granted by the issuer to the cardholder and where any amount of the credit utilized by the cardholder has not been settled in full on or before a specified date, the unsettled amount may be subject to interest, profit or other charges.”
In simpler terms,
A credit card is a small piece of card that used to pay for things using borrowed money from the issuer bank.
You will be needed to pay off the borrowed money to the bank with a charge of interest at the end of every month.
Back in the days,
The credit card had a magnetic strip that only has coded info on your account,
But the modern-day credit card contains a chip that can reveal may information on you and your account.
A credit card differs from a debit card in many ways.
But one prominent difference is that while for credit card you borrow money beforehand from the issuer bank to pay for your purchases or commitments,
For debit card you use the money you already have in your account for payments and transactions.
Credit cards are issued for merchant banks by financial payments solutions companies such as Visa MasterCard and American Express.
These banks offer a 30-day short term loan to the user to settle payments and transactions.
The users are then required to pay the amount with the interest charged at the end of the period.
Credit cards can be both good and bad for your financial management.
It can cause you to easily spiral into debt if you miss your payments,
And is imposed with various other charges such as annual fees, late payment charges as well as penalties for exceeding your credit limit.
But on the other hand,
If you pay your charges monthly with no hiccups,
It is good for your credit score as well as very useful during emergencies.
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There is no limit as to the number you can own in Malaysia.
But it should be noted that anything that exceeds the optimal amount often spells danger.
Let’s look at the pros and cons of having multiple credit cards, shall we?
Having multiple credit cards comes in handy when you assign those cards for different purposes.
For example....
You may have one for your daily expenses like grocery, petrol whereas another for bigger and rarer expenditures like electrical appliances or even medical bills.
This is helpful when you are focusing on a healthy and organized financial spending and do not want to max off your limits of one card before the month ends.
This is a good strategy,
Especially when you need cash advance for emergency situations, you need not worry because you have enough.
But the real issue arises when you have multiple cards to juggle.
Firstly,
Pyments must be made consistently without any glitch every month, as missing even one payment of one card may put you way back in your financial stability.
Therefore,
Careful planning and dedication in paying is very important.
Missing one payment may also affect your perfect credit score.
Therefore,
While you can have as many cards as you want, you must ensure that you can afford them in the long run in order to have good credit ratings.
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It is always important and savvy to be updated with your credit card balance,
Especially before you make large purchases so as not to exceed your limits.
Apart from that, you can also see where you stand with your monthly expenditure,
And keep tab of your spending efficiently.
Unlike the olden days when you will need to wait for our printed statement posted to your address,
You can easily check the balance with less hassle in today’s world of advanced telecommunication.
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1. Via phone: simply call the number behind your card and request for the balance after providing your card number and other details.
2. Via bank website: Log on to the issuer bank’s website and key in your account details. You can easily see all details about your balance here.
3. Via app: Go to App Store of Google Play Store and download your card issue bank’s app. Here you can log in using the same username and password as you do with your online account that you used on the website. When you have successfully logged in, details of oyur cards can be easily seen here.
There are many ways to pay your credit card amount every month.
For convenience,
Many people to pay it online using their respective online banking account.
Some people opt for cash transfers,
While others also select the auto-billing option on their account to avoid missing payments.
Some people, especially those using their credit card for business purposes, also opt to pay by cheque.
To do this,
You simply have to visit the bank’s branch and deposit your cheque into the cheque deposit machine.
1. Make sure you write the details clearly and legibly in your cheque slip
2. Make sure you put in the credit card numbers correctly
3. Always ensure that you have written the credit card numbers and the respective amounts to be settled separately if you are using one cheque to pay for more than one credit card
A balance transfer credit card is facility that is employed to transfer your current outstanding balance on the credit card of one issuer bank to a new credit card.
The new card usually offers very low or 0% interest.
By doing this,
The new credit card would pay off your old outstanding balance, and you can consolidate all of your credit card debt on just one card which provides better interest rate.
But keep in mind that this method can only be used after a certain time frame as per the issue bank, normally 6, 9, 12 or 36 months of repayments.
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Cancelling credit card properly is very important, because if its not done properly,
It may cause unnecessary issues in the future.
First of all,
Consult your credit score and make sure the cancellation will not hurt your score.
You can use this by checking Bank Negara Malaysia’s website.
Following this,
Make sure you have paid off all your balance on the card and have cancelled all auto-deductions you have previously opted using the card.
Contact your bank to discuss the cancellation.
They may counter-offer with cards with lower interest rates,
But if you have made up your mind, insist on the cancellation.
For further confirmation,
You can also write an official letter to the bank requesting a cancellation, and follow up on your status once you have requested the cancellation.
Finally....
You can cut your card using scissors but remember,
Just cutting it without cancelling it does not mean you have cancelled it, but merely stopped the card’s usage in the future.
Extra reminder: Make sure you have claimed all your accumulated redeemable points in your card to collect any freebies you are entitled to.
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