“Help me on credit card sales, I give you free gift”

Does the above conversation sound familiar to you? This is very common in Malaysia.

I got the idea to write on credit card after kept being  approached by credit card sales person in the mall.

Imagine.

The typical credit card sales booth in the mall.

Credit card sales person carrying freebies, trying to stop passersby to lure them into signing up credit cards.

So, out of curiosity, I did some surveys on why people sign up for credit cards.

Reason #1

Cash Back & 20 days Interest Free Period

“I have multiple credit cards, and I earn cash back of average RM 300 – 400 per month.”

Yes, when you have large bill & right credit card, you can save up quite a big chunk of money.

“You know, there is 20 days interest free day before your credit card payment due date. I utilize that 20 days to earn interest.”

Where can you earn interest in 20 days, and still keep your capital intact?

You can do that by investing in liquid asset which gives you interest on daily basis.

Example:

1. Phillip Master Money Market Fund (3.5 – 3.7% p.a.), minimum investment RM 1000
2. UOB Invest Pro Account (3.15% p.a), minimum investment RM 50,000

Reason #2

Build Credit Profile

“I want to build my credit profile, so that it is easier to get a loan from banks.”

This is a smart move for those just started working and plan to take up on mortgage loans in near future. Bank needs to evaluate your paying your habit before approving your loan.

If there is no historical data on your credit report, banks can’t assess your creditworthiness, therefore they would demand more documents and takes longer time to approve your loan.  

To build your credit history, start apply for a credit card (with low credit limit) as soon as possible after your start working. Of course, pay off your credit bills on time to build good credit history.

Reason #3

Freebies

“I got freebies like power bank or luggage from signing up the credit card”

“The credit card gives me free life insurance coverage”

Yeah, We Malaysians love freebies!

It is good to sign up credit card because it benefits you, instead of the freebies.

For example, OCBC Great Eastern Platinum MasterCard offers free RM100,000 life insurance.

Really? You might start thinking what are the hidden clause?

It is great that you start pondering!

So, what’s the catch?

• Only Great Eastern Policy Holder can apply for it.
• Minimum spending of RM 10,000 yearly is required.
• No annual fee for life.

The key here is: read the term & conditions every time before you make any financial decision.

All in all, credit card can do you wonders, but don’t forget that you can be turned into credit card slave too if you don’t manage it well.

Read my previous blog on credit card management

http://bit.ly/creditcardmanagement

Do let me know what’s your thought on credit card!

Share this blog to your friends & family, too!