When your credit card bill arrives, that small minimum payment amount can look pretty tempting. It’s usually just 5% of your outstanding balance or a flat RM50, and paying it keeps your account in good standing. It feels like an easy way to manage your cash flow, but this convenience is a costly trap that benefits the banks far more than it benefits you.

Let’s break down how that minimum payment works and what you can do to win at credit card!.

How Credit Card Interest Really Works

Think of your credit card as having two different modes. The first is when you pay your balance in full. For regular shopping, Malaysian banks give you an interest-free period of about 20 days from your statement date. Pay the entire amount owed by the due date, and you pay zero interest.

The game changes the moment you don’t pay the full amount. Mode two is another level of Boss. That interest-free period vanishes, and finance charges are applied to your remaining balance. In Malaysia, these interest rates are tiered, typically from 15% to 18% per annum. Banks reserve the lower rates for those who consistently pay on time, so carrying a balance can lock you into higher charges.

Cash advances are even more expensive. Unlike shopping, cash withdrawals have no grace period and start accumulating interest immediately at 18% per annum. On top of that, banks charge an upfront cash advance fee of 5% of the amount, or a minimum of RM15 to RM20.

The Real Cost: Let’s Do The Maths

We’ll  look at a real-world example. Imagine you have an RM1,000 balance from regular shopping, with an 18% annual interest rate.

• If you only pay the minimum (RM50): It will take you 26 months to clear the debt. By the end, you’ll have paid RM205 in interest alone.
• If you pay a bit more (RM100): You’ll clear the same RM1,000 debt in just 11 months and pay only RM88 in interest.

By adding just an extra RM50 to your payment, you save RM117 and get out of debt 15 months faster. It’s a powerful example of how compound interest works against you when you carry a balance.

Getting Out Of The Minimum Payment Cycle

Paying more than the minimum is the best and most direct way to get out of debt faster. But if you’re juggling multiple card balances or struggling to make payments, there are powerful ways to regain control.

If your credit card bills feel unmanageable your first call should be to your bank. It’s normal to feel nervous or embarrassed about asking for help. But remember, banks would rather help you than see you default. Many Malaysian banks have financial relief programmes for customers facing hardship and may offer longer repayment periods or convert your credit card debt into a lower-interest term loan.

If you need a more structured approach, debt consolidation can be a game-changer. This involves combining your debts into a single payment, often with a much lower interest rate. Popular methods include moving your debt to a balance transfer card with a 0% introductory rate or using a personal loan to clear your balances.

When the situation feels overwhelming and you need serious help, you don’t have to handle it alone. Agensi Kaunseling dan Pengurusan Kredit (AKPK) is a government-backed agency that provides free financial counselling and support to Malaysians. If you qualify for their Debt Management Programme, the AKPK team will work directly with your banks to combine your debts into one affordable monthly payment. One of the biggest reliefs is that once you’re enrolled, collection calls and lawsuits for the debts included in the plan will stop

It’s Time To Break The Habit

So, the next time your credit card bill arrives, look past that tempting minimum payment. You now know it’s part of a long and expensive debt cycle. By committing to paying even a little more each month, you’re actively cutting down the interest you’ll pay and the time you’ll be in debt. Taking control of your credit card is a powerful step towards your own financial independence.

If your current card isn’t working for you, take the time to compare the best credit cards in Malaysia to find one that better suits your financial goals.

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• TAGS:
• Credit Card
• Credit Card Bill
• How-To