Credit Cards

Owning a Credit Card

Credit cards have re-identified the traditional payments as they bring convenience and efficiency to our lives. We can purchase goods and services by just tapping our credit cards. If we know how credit cards work, it will make our lives better. There are some ideas that we have to consider before we apply for our first credit cards.  

Understanding our financial habits.

There are 4 questions that we have to consider to understand how we spend our money.

  • Do you need to travel a lot and want a safer payment method?
  • Do you have to purchase things that are expensive, especially paying bills regularly?
  • Do you use a specific service that makes things easier using credit cards?
  • Do you always cautious of your daily expenditure and are responsible for your hard-earned money?

If your answers are yes for these 4 questions, then a credit card might be necessary to you. Credit card is essential but it does not mean that you are prepared to own one.

Knowing the operation of credit cards

People always think that credit cards are just an alternative of the payment method. However, it does have some risks and rewards. Therefore, it is essential that you fully understand how credit cards work before you apply for a credit card.

There are plenty of terms and conditions on credit cards. You need to understand the most important ones that will have the greatest impact on your credit. Think about how to gain a good credit, the additional charges and how to avoid it, the most efficient way to pay for the credit card and so on. If you think that the information from the bank does not answer your questions, the best way is to ask your family and friends who have already owned credit cards and let them share their experiences with you.

Understanding the cost and charges of credit cards

There will be fees to pay to have a credit card. However, the charges vary by bank and card. There are alternative ways to avoid paying extra charges if you remember what you spend. Usually the charges include two payment types:

1. Fixed charges:

Including the service fees, annual fees and fixed fees in the description of the credit agreement. Some of the banks will offer zero annual fees as a special registration offer. Some banks just do not have charges on annual fees. If you want to save on those fees, check out our list of credit cards that require no charges of annual fees.

2. Variable charges:

The interest rates might apply on credit cards only when you have the credit balance that carry from one month to the other. Besides, you will be charged on penalty fees when you forget pay the credit card’s bills. Furthermore, the incidental fees will be applied on a usage basis. Therefore, you have to pay the foreign exchange fees when you use the card overseas.

Choosing a suitable credit card

You have to choose a that suit your expenditure. Some of the banks will offer good perks to certain customers. Customers can enjoy rewards, cashback and discounts which save money.

For example, if you go to the cinema, your credit cards might give you free tickets or cashbacks. Moreover, there are other cards that provide low interest rates, travel discounts, mall promotions and so on. Hence, choosing a credit card that suit your lifestyle will benefit you more.

Checking your qualification

There are some qualifications to get your credit cards. Each of the credit cards require different requirements but credit cards generally require:

  • A minimum earning of RM24,000 per year
  • Age above 21 years old
  • Working for 3 months or above

Using your credit card wisely would definitely help you manage your money. However, do use your credit card responsibly as this does not mean that you can purchase something beyond your purchasing power.

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