Here Are The Answers To Your Top Credit Card Questions!

A1: Credit cards provide you with money borrowed from card providers to purchase things and you have to pay off the money borrowed within the due date. Failing which, you would be charged interest.

You can use credit cards to pay for your everyday purchases such as groceries, lunch outings and online shopping. You could also use your credit cards to buy flight tickets to your next holiday destination. Other uses include balance transfers and cash advance.

Owning a credit card can reward you in the long run as credit card providers often reward you with cashbacks, reward points or travel miles when you use the card.

A2: A 0% instalment plan on your credit card probably works best if you are completely sure that you are able to promptly make the payment every month, and also if you have enough free credit limit to last you until you fully repaid the full amount.Q2: Is it wise to buy gadgets or the latest phone with a credit card that offers 0% instalment plan?

Take note: Never make purchases that’s close to or more than your credit limit and never make big purchases that you can’t afford.

Just like the credit card itself, the easy payment scheme is a great feature if you always stay one step ahead of it. When you pay credit cards in full each month, you are charged little or no interest. However, be wary of its impact on your credit ratings if you max out your credit limit or default on monthly repayments.

A3: Absolutely! All you need is a solid financial plan and discipline. One of the ways is through balance transfer. See Q5 for more details on balance transfer.

A4: You can resort to balance transfer where you can choose another credit card provider who offers a lower interest rate. For more info on balance transfer, refer to Q5.

If you are at a point where you need help with your debt management, you could resort to credit counselling service done by Credit Counselling and Debt Management Agency (AKPK). AKPK is a non-profit agency set up by Bank Negara Malaysia.

However, you need to be aware of the implications of credit counselling. You will have to cancel all your credit cards, lose the ability to make bank overdrafts, and cannot apply for new loans or credit cards. Read more about it here.

A5: It is a programme that provides a way to transfer the balance (i.e. the amount of money you owe) on your existing credit card account to a new account with another bank (or credit card company).

A balance transfer will help you to consolidate multiple accounts, meaning you only have to pay for one account with one interest rate within one repayment due date instead of multiple accounts with multiple interest rates and multiple repayment due dates.

You would also be able to make use of lower interest rate and zero interest period usually offered by card providers to entice new customers. It’s a win-win situation and one that could offer you a clear pathway towards being debt-free.