Benefits of Using Credit Card

14th March 2009
Credit card. Do we really need to use it or we should avoid it totally? Well, its up to you really, whether to spend through it or use cash instead. Recent survey by AEON Credit Service (M) Bhd, showed that consumers were buying more items on credit these days, instead of using cash. Additionally, the recent relaxation in the interest rate and the late payment charges may encourage consumers to increase further their consumption credit patterns via the use of credit cards, according to OSK Research.

With the credit crush looming and recession inevitable, some people would definitely advice otherwise but with bank cutting all interest rate on this section like:

1) Late payment fees were reduced from a minimum of RM10 to RM5.
2) The maximum fees were reduced from RM100 to RM75
3) The reduced rates were from 15% to 13.5% for Tier 1 credit card holders, 18% to 17% for Tier-2 and 18% to 17.5% for Tier-3
4) Bla.....bla.....bla......

then we can all consider this again.


To tell you the truth, I don't see this as an advantage at all with all these benefits mentioned above but for some long time users, who basically owe the bank money, this would come as a small relief. For me, i have only one policy regarding the usage of this credit card, don't owe the bank anything. Pay up within the dateline set(3 weeks grace period). Simple as that. You have to spend within your means of course and since nowadays, credit card usage can be tracked through internet banking, then make sure you know your limits.

Previously, people would say that if you use credit card instead of cash, you won't be able to tracked your usage but this is all in the past with the introduction of internet banking. So, my point is, if you have credit card, ask your bank to help you set up internet banking so that your spending can be monitored at all times. If you really wan to save more on this, have your bank saving account link to your credit card, and therefore, its advisable to have a credit card from the same bank as your saving account bank. This is because, when the time comes, you can pay the credit card through online transaction which is free of charge rather then having to pay Giro(interbank) charges if you are using different bank's credit card. Some people might say that i would rather to draw up the money from my saving account through ATM and deposit it into the another bank to pay your credit card so that they can avoid the charges. Well, its extremely true if you are going there by chance but if you purposely go there just to do that, then risking yourself of robbing as well as usage of petrol and all to get there might cost you more then the RM2.00 (Giro charges) the bank charges you.......am I right.

So, until now, do you still thinking about using credit card instead of cash yet?
If no, then read on......kekekeke.......

Credit card companies now offer a lot of attractive bargains on goods shopped or discount on dining using their credit card. For me, since we are going to shop or dine in that particular place anyway, with or without credit card, we might as well take on the bargain offer by that credit card company to shop or dine there and furthermore, we can get points with it. Example, you want to have a dinner to celebrate something with your wife of girlfriend or maybe with your parent, look out for a restaurant that have 10% or 20% discount with a particular credit card instead. For my case, i went to this Japanese restaurant to celebrate bla....bla....bla..... when the time comes to pay, i notice that with this particular credit card, i would get a 10% discount. Imagine, if i were to pay with cash, i would not be getting this 10% discount anymore and of course, you may notice, Japanese restaurants do not come cheap and with the amount i save, its already a profit to me. Some people might say, we don't go to expensive restaurant to dine, and only go to hawker stalls where credit card is not acceptable, well, i would only say, pay in cash then but keep the credit card as backup plan only if you do one day dine in this expensive restaurant and i don't believe you won't do so one day. Some of these bargain extend to electronic goods which you might need to buy if the one you own broke down. So all this become relevant already to shop wisely and to do something only profitable to you. Since you already will spend using cash, might as well spend if using credit card.

Another benefits of using credit card instead of cash, you can accumulate points. Some, said, which i do agree, is that the point collected is so minimal that i take centuries to collect to a point where you can redeem something useful. Absolutely right but do bear in mind, if you use cash instead, you won't get any points at all but still you are paying the same amount right? So why not use credit card. Further more, a lot of banks has very long expiry date on the points accumulated and some even don't have any expiry date and thus, you can collect all the points you need and only redeem something when you see you want to use. Example, I redeemed a Phillips cordless phone using my points and although the point needed for this is quite big, but then again, I don't need to pay a single sen for something i want to use. So, what else can you say. If you plan to redeem LCD TV, then you need to spend more on the credit cards but if you don't want then use the credit card to buy then since you might get discount out of it.

Another benefits that i see in the usage of this card is that some cards do offer 0% free installment scheme that you can pay for something up to 36 months period without charging you any interest. Well, seems attractive right?.....Wrong !!! For this case, you need to be careful as some shops will charge you 5% in interest if you were to do this as they would need to pay the banks if they would let u use this benefits. Instead of losing money on their side, they pass this charges to the consumers instead. So, take note on this. On the other hand, some shops do 'eat up' this charges but bear in mind, normally the shops who sells their good higher then normal but they called it as branded. For example, Lorenzo, Rozel, Arredo, Kamay which are all furniture shops, will normally eat up the charges but since you are going to pay the amount for that goods, then might as well use up this benefits of 0% interest benefits and save as much cash in bank as possible but if you do need to save money and buy furniture at Ah Too Ah Khau furniture shops since the goods are cheap, use cash then because paying for the charges is not something avisable and this 0% interest scheme is something of a benefits and not a must.

By the way, some people say that owning more then 2 credit cards from 2 different companies are really dangerous because of the spending power that you might have but for me, i would totally disagree with this. Yes, i do agree that spending power will be tripled or quadrupled if you own a lot of these cards but bear in my on my initial points that spending must be within your means and case close. You need to be discipline on this matter and anything beside this is really wasteful. So, why i disagree of having less then 2 cards is because different credit card companies might have different approach in promoting the spending by consumers. Some companies incorporate the cards with different partners that might offer more discount. So, the more cards you have, the more option you can choose before spending then. This example can be seen with the Travel Money card which is from RHB bank where you can get a cash rebate of up to 5% everytime you fill up your transport petrol but i bet, some would say, the amount is damn small. Look at it this way then, if you pay cash or using credit card that does not offer this benefits, will you get anything at all. The answer is simple, NO. Another example is RHB Tesco card which offer rebates up to 5% when u spend at Tesco. You would not get that rebate if you spend using cash or credit card which do not offer this benefits right and since you are going to pay the same price as cash, why not get rebates on your purchases( I think RBH should give me commision for promoting their cards.....kekekeke). Well, there are many cards out there which offers different strategies, so see which one will benefits you more then.

The only downside that i see in using credit cards is the annual fee charges. You really have to take note on this as this charges is not really beneficial to you. Some cards charges you up to RM300 per annum but some are free for life. For those who charges annual fee, you need to tracked them on when is the due date before they print onto your statement. So before the due arrives, you can always call them up and ask them to waive but normally will have a condition that you need to fulfill like swapping another 12 transactions within 3 months or something like that. Worst case scenario is cancel the card with immediate effect if they said the annual fee cannot be waive and since you already use up the benefits given to you, you have nothing to lose right.

I can actually go on and on on the benefits of using this credit cards(i still have points not yet told) but tell you the truth, if you don't have self-control over your spending, then all the points mentioned above are meaningless. I've been using credit card for 5 years now and i never pay a single sen in interest. If I can do it, believe me, you can do it. If you cannot pay what you spend, then don't spend. If you have you points to prove to me or you want to discuss, just put in your comment below and i will get back to you. Whether you agree with my points or not, you still can put your comment as different people will have their own view, so am I.