Only 55% of Malaysians settle their credit card bills on time.
Are you one of them?
I have a client who is currently on debt restructuring program with AKPK. He had made plethora of purchases on credit, and converted them into instalment. When purchases are split into small instalments, he was spurred to buy more without noticing that massive debt was piling up.
Have you heard of story about boiling frog?
A frog is put in lukewarm water which is then brought to boiling slowly.
Guess what happened towards the end?
The frog is boiled to death eventually, because it is unaware of the danger (slow incremental of water temperature).
This is the same for credit card management.
You can easily turn into a frog that is slowly being boiled alive, if there you are not aware how credit card late charges work!
So, how does credit card late charges work?
If your credit card late payment charges is 20% per annum, it does not mean you get charged 20% once a year.
Credit card company charges you interest DAILY!
This interest rate is only relevant to you if you carry balance from one month to next. You are all good, if you pay on time!
Assume that you have RM1000 balance in October, and it is carried to next month. Interest of 20% per annum translates into approximate 0.05% per day.
On Day 1: Interest of 0.05% is charged on your RM1000, results in balance of RM1000.5
On Day 2: Interest of 0.05% is charged on your NEW balance of RM 1000.5! And the same process repeats until you clear off your balance! This snowballing effect of compound interest is the culprit of gigantic debt.
Now, you are aware of the danger, quickly jump out before becoming boiled frog by doing the following:
1. Keep track on your purchases, make sure that you can afford to pay for the bill at end month.
2. Pay your credit card bill as soon as possible, because you are paying interest on your balance DAILY!
3. If you are struggling with credit card repayment, you can contact AKPK for credit card debt restructuring.
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