Speak to My Finger

Today's popular newspaper from Malaysia, theStar, printed out a very interesting article called Credit Card Trap. I'm sure you all will be able to guess that the topic is definitely related to the plastic money we all or majority of us possess. I have two of them in fact cutting down from three. Please have a read because it is relevant to us.

One of the things I wanted to highlight is a part of the article that is written about credit transfer. It simply means you could transfer your credit card balance from one card to another, of course, at a very minimal fee, but that is depending from which banks. This credit transfer sounds to me like people refinancing their housing loan except this is to refinance your debt. I remember my 3 ex-colleagues overjoying that they finally found a bank that has lower late charges, and so they happily did a credit transfer, applauded by one of them because she was simply helping a relative to get credit card applications. I remember the way she persuaded the other 2 in signing up for this XX bank's credit card and encourage them to do credit transfer for just over 1% with non-late charges over their credit balance from the transfer. They went so hype until I just need to lay my hands on the credit card application, not to apply but to read those fine lines! It is just no difference that other banks. Maybe more humane to their holders? I don't know. But I wanted to point out here is what is the point of having credit transfer when you still need the same amount of time to clear off the credit card debts with the previous banks? And my next point is do you think you will not have any late payment charges after the credit transfer? Would not you have more debt after the transfer? What makes you think you won't not have any debts after the transfer when you can't even pay off your debts before the transfer?

According to the article I linked, those experts encourage card holders to pay off their debts in one lump sum before the due date to avoid late payment charges. But they didn't include how when I know many people out there don't even have a fix amount of savings each month. Here are some of my suggestions since this is what I practise since I got mine:

1) Allocate a few percentage of your salary for credit card expenditure. Let say you allocate RM300 each month, then only spend RM300 or less on your credit card. Don't go beyond that unless you know where is the extra money coming from to pay up the balance. If you fell for a cute blouse and it's just RM60 after 70% sale, go for it if your RM300 is not up yet, but if it is, console yourself next time. But please remember that this money allocation is for your number one priority, whatever it is on your list like petrol and such. You may use the balance of your allocation to pamper yourself once in a while.

2) Stick a post-it-note on your credit card. Record the amount you are going to swipe BEFORE you leave your autograph on the credit card receipt. And then before the due date, total up the record and you will know how much you have to pay. This is a lesson I learned from losing track of my spending when I just got my plastic money.

3) Find any empty jars or coin box and start filling it up with your coins or a few dollars a day until you are going to pay your credit card bills. The amount accumulated is not much but still you could save at least RM60 in a month.

4) Bank in some money to your credit card account even before you receive your statement. This will reduce your heart attack when you receive your statement. You would even be surprised when you see your statement if you practice this!

5) The most general method: Don't use credit card at all. But I bet this is impossible. Then why not try applying for credit cards that give out rebates? This is where the trick comes in: which bank to apply since all credit card has different benefits? This is for you to research then!!

Recently XXX bank has barred my mother from using her credit card just because she has signed up for something expensive despite still within her credit limit. The reason was my mother has not RETURN whatever the bank has lent her. She has paid up some of the amount but still the bank would not let her use the card to her limit. In fact, her informal limit for now is RM900 just because she has not return the total balance despite being a good pay master.

For those who thinks money and plastic money is the root of all evil, please don't be frightened by the thought of getting a credit card. You can always sign up for one and leave it in the house if you are just helping out your friends who are credit card agent.

If you have any other extra tips, please share with me.

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