5 Dec - 4 min read
Payment cards that pinch instead of smack.
Ever since we were small we had been taught the importance of being punctual. From attending classes to meetings and even going on a date, we strive to be on time because we know how annoying it can be when someone is late. The same thing applies when it comes to managing our finances.
However, sometimes even after careful planning and meticulous preparation, disaster strikes. A sick family member, a sudden job loss or a car breakdown; they can happen when you least expect it. As a result, you miss a credit card payment, or two.
You may think that is no big deal, so why the fuss on a late credit card payment? Because you’ll end up paying more! Apart from your credit card’s balance, you will also have to fork out money for penalty and interest charges.
Most banks charge 1% of total outstanding balance as a penalty for late payment, subject to a minimum payment of around RM5 to RM10, and a maximum of RM50 to RM100. Interest charges vary from bank to bank as well. Credit card holders who make prompt monthly payments are being charged the lowest interests, which are around 13.5% to 15%. On the other hand, credit card holders who are always late on payment are being charged 17.5% to 18% interest rate per annum.
If you don’t fall into one of the above categories, you are probably making timely payments on your credit card every month, except on one or two occasions where you can’t help but pay later than the due date. If you’re thinking of looking for credit cards with lower interest rates for that late payment period and even better savings, read on.
Why don’t you take advantage of credit cards that have low finance charges like Maybankard 2 Platinum Card? It only charges 8.8% p.a. on outstanding retail balance for cardholders who promptly settle their minimum payment every month. However, those who miss their payment will not be able to enjoy this savings and will be charged from 16% – 17.5% p.a.
Citibank also offers low interest rate for their credit card holders – at 8.88% p.a. However, this is only applicable to those who promptly pay more than 50% of their monthly outstanding balance for 12 consecutive months. Credit card members who do not manage to do this will be charged 15% – 18% p.a. as per Bank Negara tiered financial charges guideline.
Alliance Bank You:nique credit card on the other hand cuts half the interest charges to only 9% p.a. You can enjoy this savings for the first 12 months, and continue to do so throughout the tenure of the credit card if you consistently make prompt minimum payment every month. If you fail to do so, your payment will be subject to Bank Negara tier interest guidelines.
Affinbank also offers great savings in their line of credit cards; at only 9.9% per annum. This is applicable for both full and minimum payments made on or before the due date. On the other hand, an interest of 17.50% p.a. will be charged if no payment was made by that date. This is still a little bit lower than some banks that charge 18% p.a.
If you’re unable to settle your outstanding balances and only manage to pay the minimum amount, the OCBC Titanium credit card offers great savings – a 33% Cash Back on the total interest that has already been paid. How does this work? Let’s say in your card’s October statement you have to make a minimum payment of RM500 with total interest of RM100 and the due date is 30 Nov 2012. You pay the minimum amount (RM500) on 28 Nov 2012. You will then see a credit entry of RM33 Cash Back on the total interest paid (RM100 X 33%) in your card’s November 2012 statement.
AmBank True Card is a credit card that helps you save more by offering 0% interest on all purchases for the first 3 months. After that period, if you continue to make prompt payment, you will be charged 12% p.a.
Looking for a longer interest-free period? Al-Rajhi Charge Card-i is the right one for you. It offers 55 days interest-free period, a great option for those who can afford to settle their balances in full, but need more than the usual 20 days to pay them. However, the credit card holder can only use the credit card for purchase of Halal goods and services, failing which the bank has the right to suspend or cancel the credit card.
While these credit cards are great to have, it doesn’t mean that you can just make payments as and when you wish. These are just helpful assistants you need during that rainy day.