Tag Archives: annual interest rate

0% interest

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If you are a credit card holder,I don’t think you will feel so strange on 0% interest.Actually a lot of banks take 0% interest as a big title for their promotions to encourage the existing customers to spend.Recently I got a similar ‘great’ deal from local H Bank introducing in the latest brochure.

In the brochure,it says I’m eligible to make cash advance within the available credit limit of the credit card with 0% interest.Read until this point,I had already raised up my questions:if 0% of interest,what will the bank earn?So I read carefully word for word and found this note:5% cash advance fee will be charged and the 0% interest rate is just for 6 months.

To some simple calculations,we just transfer 5% cash advance fee into annual interest rate,which will be 10%.Please don’t forget that 0% interest is only valid for the half year and after that period,the normal interest rate for credit balance will be charged.Thus,if people take this advantage to get some money,but unable to pay it up within 6 months,he will be charged more than 10% at the end.In fact,a few personal loan interest rates that banks offering are better than this.

Banks always play such tricks to bluff us,so we have to be smart enough to not let it work.

TO BE A SMART CONSUMER! :)

Decreasing on charges of credit card

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IBMM(Institute of Bankers Malaysia) announces that from March 31 2009,annual interest rate of credit card will decrease up to 1.5% and late payment penalty/rate will be charged from RM5 up to RM75.

The detail of interest rate will be:

Credit Record

Good(first tier)

Fair(second tier)

Bad(third tier)

    

Old Rate

15%

17%

18%

    

New Rate

13.5%

16%

17.5%

 

I think this is a policy to reduce the burden of people in this bad financial position.At the same time,it could be treated as one of reflationary policies though it may encourage evil trends like over-consumption.

Currently there are RM23 billion credit card debts in Malaysia and if banks cannot well-control and collect those debts,they will face some serious problems such as a huge number of bad debts occurred.Thus,less cost on using credit cards doesn’t mean that we can use credit card freely.When we enjoy this benefit,we also need to know the importance of having a good consumption custom.We have to remember ‘SMART SPENDING’.