Credit Card and Bankruptcy in Malaysia

According to the Malaysian law, you can become bankrupt when the outstanding sum involved is RM30000 (previously it was RM10000) or more with a default period of six months or more. Defaulting on credit card payment is among one of the ways to be bankrupt.

Among others, being bankrupt, you cannot


• Hold any public office without the approval of the Director-General of Insolvency Malaysia (DGI)
• Pursue and court action without the DGI’s permission
• Leave the country without the court’s or DGI’s permission. The DGI will hold your passport.
• Be a company director or carry out your own business or be involved in the management of a company without the court’s or the DGI’s approval.
• Be involved in the management of a company or be an employee of a company that is owned by your spouse or close relatives and their spouses
• Be a committee member of any registered body.
• Open a bank account without the approval of the DGI


A bankrupt can work but he or she has to leave a certain percentage of his or her income to the DGI to repay debts. A person can be discharged from "bankruptcy" when he or she has settled debts in full.

The sensible way to avoid being bankrupt is to pay your credit card bills fully and promptly every month upon receiving their statements.

The following is an extract from MyPF:

Malaysia Bankruptcy Law Updates

Malaysia’s bankruptcy laws receive an update in March 2017. Here are the key updates.

• The minimum to be declared bankrupt is raised to RM50,000 (from RM30,000).
• Social guarantors can no longer be declared bankrupt. Social guarantors provide guarantees to loans such as educational loans, hire-purchase loans, and housing loans which they are not beneficiaries of.
• Automatic discharge of bankruptcy after three years, subject to good behavior including making payments towards your debt and submitting a full accounting of your monies and properties (previously 5 years and subject to Director General of Insolvency’s approval).
• A debtor may propose a voluntary arrangement to his creditors any time before he is adjudged bankrupt.
• A bankruptcy notice needs to be served personally to a debtor.

Things to Consider before Getting a Credit Card

Do not think that when you have a credit card your lifestyle will change for the better or you can spend freely. In fact, when you don’t manage your credit card with care you will end up as a bankrupt 

Consider the following before acquiring a credit card:


1. For convenience and not for credit: Don’t think that you can increase your spending power by just paying the minimum amount and roll the balance to the following month and continue to spend in this way. A credit card is for convenience and not to obtain credit or to incur debt. The outstanding amount has to be settled fully and promptly when you receive the monthly statements

2. Take advantage of credit card benefits: You can take advantage of your credit card to reduce your normal expenses such as petrol and other grocery items. For certain cards, you are given rebates for the purchase of these items.

3. Simplify your life: You can arrange with the card issuer to pay for all your utility bills and insurance premium. Life is easier when you don’t have to issue too many cheques and go to too many places to settle your monthly bills and commitments

4. Self-discipline: Are you able to control your spending according to your budget?
Are you not an impulsive spender? You can keep a credit card if you follow closely your monthly spending pattern with or without a card.

5. Track your spending: You can use your credit card as a tracking tool to monitor your spending. Review the monthly statements to trim unnecessary expenses.


When used correctly, a credit card is an asset and not a liability.

Central Credit Reference Information System of Malaysia

Central Credit Reference Information System

There was a story in The Star telling that an applicant who changed her mind and never collected the credit card. However, RM5 was debited into the account. Because the card was neither collected nor used, it may be presumed that no statements were sent.

As often happens, a surprise awaited the individual concerned when her application for a housing loan at another bank was rejected because she had been “blacklisted” on account of the outstanding debt of RM5 that had been reported to the Central Credit Reference Information System (CCRIS).

According to the article, Credit Worthiness, there is no such thing in law as a blacklist described or defined anywhere or in any document. It is a word that has come to refer to arrangements made by individuals, groups, or even institutions to create an “alert” system.

However, through the ignorance of some of the officers of lending institutions or institutions granting credit, and lack of appreciation of the role of such an alert system, its usefulness is not really appreciated and instead results in inconvenience. The purpose of such a list is not to condemn an individual just because his or her name is on it.

Its real purpose is to alert the organization to which a loan or other application is made as to some relevant aspects of the individual or organization’s past dealings with a view to a possible critical examination. The existence of such a list is to assist in the process of credit evaluation. This can only be done by asking the person concerned for an explanation with regard to the nature of the list.

The individual is put through unnecessary inconvenience for which there is no real remedy. This is because the repository of the information will merely claim to store and making the available date. The lending institution will say that at that stage, there is no contractual relationship that can be the basis of wrongdoing.

The writer, Bhag Singh, recommends that given such a scenario, the welfare of the individual can only be protected by having institutions with better-trained officers and regulatory bodies that can exercise greater vigilance to safeguard the interest of the public.

Related post:

Credit Report

Credit Report

Your credit report contains your credit history and your personal information. Your credit record includes your credit accounts, loans, bankruptcies, and late payments. Upon receiving an application for a loan or credit from you, financial institutions can obtain your credit report to assess your credit-worthiness before approving your application. It is very important that your credit report is updated before making credit applications.

In Malaysia, you can obtain your credit report from the Credit Bureau of Bank Negara Malaysia. It is housed in a computerized database system known as the Central Credit Reference Information System (CCRIS).

In the past, the Credit Bureau of Bank Negara Malaysia was empowered to disclose credit information only to financial institutions. With effect from March 2002, an individual can request for his own credit record. However, you can only apply for a credit report once every 12 months. It is free of charge.

When you wish to ask for your credit report you can go to

http://www.creditbureau.bnm.gov.my and download Form CBS 01 (Credit Report Request Form) from Bank Negara Malaysia or Central Bank of Malaysia.

If you dispute the information reported by the financial institutions in your credit report you can fill up another form, Request for Data Review. The Credit Bureau will investigate and notify the financial institution that had provided the disputed information together with all relevant data. The investigation and remedial process will normally take about a month to be completed. You will be notified of the outcome of the investigation. In the event that the disputed information is confirmed accurate, you are advised to refer the matter to the respective financial institution.

Merchants in Malaysia are Warned about Credit Card Transactions

Merchant Agreement

According to a recent report in the New Straits Times, there are unscrupulous traders who transfer the two percent surcharge, which they are supposed to shoulder to provide credit card payment services,  to their clients. Second Finance Minister Datuk Sri Ahmad Husni Hanadzlah says credit card users have been advised to report to the authorities if any merchant transfers the two percent surcharge on any transaction to them. He adds that the best way is for buyers to report such cases so that quick action can be taken.

Subsequently, a reader sends a letter to the editor of the newspaper asking about the appropriate agency to make a report. I think what the reader can do is to approach the bank in which the merchant has entered into an agreement to accept credit card payments. Inform the bank that the merchant has violated the merchant agreement. He will be able to identify the bank by looking at the charge slip. If he is unable to resolve the issue he should next approach The Financial Mediation Bureau to settle the dispute with documentary evidence.

Credit Card Disputes – Get Free and Professional Mediation

Source:http://empowerla.org/city-attorneys-dispute-resolution-program/


Do you have a dispute with your credit card issuer and you are unable to resolve the issue? Look no further. Go to The Financial Mediation Bureau (Malaysia) for an amicable settlement.

The Financial Mediation Bureau is an independent body set up to help settle disputes between you and your financial services providers who are its members. It provides you with a free, fast, convenient, and efficient avenue to refer your disputes for resolution as an alternative to the courts.

The financial Mediation Bureau will assist you in other financial issues and not just credit card related. Among others, disputes relating to the following can be referred to FMB:

Personal and housing loans

ATM

Cash deposit machine

Hire purchase

Savings and current accounts

Fixed deposit

Internet banking

Insurance

Go to http://www.fmb.org.my to find out more about the bureau.

Credit Reporting Agencies in Malaysia

The Credit Reporting Agencies Bill 2009 introduced and tabled at The Dewan Rakyat recently by Deputy Finance Minister Datuk Dr. Awang Adek Hussin is scheduled to be debated and passed during the current meeting of Parliament.

According to a report by New Straits Times, when it becomes law, private credit reference agencies such as Credit Tip Off Service Sdn Bhd (CTOS) will be controlled through registration and supervised by a registrar.

The bill will complement the Personal Data Protection Bill, which aims to protect and regulate the use of private data. The bill also seeks to ensure the credit reporting agencies and their officers will be responsible for compiling data and updating them. Often, this failure had resulted in many people, who had settled their debts or loans, remaining on the blacklist of banks.

However, credit agencies have to get written permission from customers when they require such information from the customer concerned for the first time through a notice. The notice should inform the customer to whom the information would be given to and if it is obligatory or voluntary for any of the information to be disclosed by the customer.

The agencies also cannot disclose information unless it has obtained permission from the customer. However, there is an exemption and information can be disclosed to prevent crime or when it is provided for under the law.

CIMB Petronas MasterCard- The Best Credit Card

One of the best credit cards available in the market now is the CIMB Petronas MasterCard. As a cardholder, I enjoy the following benefits:

1. No annual fee: This is a card with no joining or annual fee and there is no condition attached, as it has always been advertised that it is free for life.

2. Rebate of 2% on petrol: When you pay cash you pay the full pump price of RM1.80 per litre. However, when you pay by CIMB Petronas MasterCard you pay only RM1.764 in the following month. Just imagine you pay less and on top of it, you get interest-free credit for one month. Apart from petrol, I get a 0.5% rebate for all other retail purchases.

3. Travel benefits: When you charge the full fare of your airline tickets, you get automatic travel insurance coverage, lost baggage and baggage delay insurance and reimbursement for immediate necessities in the event of flight delay and missed connection

4. Making the payment is easy: I can do an online settlement of my outstanding balances. I can also pay at any CIMB Bank counter or use their cheque deposit machine or I can post a cheque to them. The best part is that every time when I make a payment I pay less. The 2% rebate on petrol and 05% rebates on other retail purchases are given and shown in the monthly statements.

5. Mesra card: Because you use Petronas you can join the PETRONAS Mesra Loyalty Programme for free and get a Mesra card. Points are collected each time you pump petrol or buy things at their Convenience Stores. You get 1 point for every litre of fuel purchases and 1 point for RM 1 spent on Qualifying Transactions at the Convenience Store at PETRONAS service stations.

6. Promotions: From time to time Petronas offers cash prizes and valuable cars to lucky customers of Petronas. I hope I can be the next lucky winner of a cash prize or an expensive car.

7. Interest and other charges: I don’t have to worry about interest charges because I pay fully and promptly every month.

If you are looking for a credit card especially a card to reduce your petrol expenses, get a CIMB Patrons MasterCard today. Get real rebates when you use the credit card and get reward points from your Mesra card when you pump petrol.

Petrol Price History RON 95:

12/05/2009   RM 1.75
  1/09/2009   RM 1.80
16/07/2010   RM 1.85
  1/12/2010   RM 1.90
  3/09/2013   RM 2.10
  2/10/2014   RM 2.30
  1/12/2014   RM 2.26
  1/01/2015   RM 1.91
  1/02/2015   RM 1.70
  1/03/2015   RM 1.95
  1/06/2015   RM 2.05
  1/07/2015   RM 2.15
  1/08/2015   RM 2.05

Source: http://blog.galvintan.com/malaysian-fuel-price-history/

Debt Management – Get Free and Professional Help

You need help urgently when the following situations describe your personal finance:

• If you are not in control of your money;
• Have more debts than you can manage;
• If you are living paycheck to paycheck;
• Are only able to pay the minimum 5% on your credit card bills;
• If you are taking cash advances from your credit card to meet your expenses;
• Do not have any savings to meet personal or family emergencies;
• If you have a debt collector calling you regularly;
• If you are being served legal notice of demand.

Where can you get free professional assistance in Malaysia? The answer is AKPK (Agensi Kaunseling dan Pengurusan Kredit) or Credit Counseling and Debt Management Agency. AKPK is an agency set up by Bank Negara Malaysia or The Central Bank of Malaysia to provide financial education, financial counseling, and debt management for individuals.

AKPK offers a free Debt Management Programme to individuals who fall under these categories:

• Not an undischarged bankrupt
• An individual unable to manage their own debts
• Must have positive net income
• Not under advanced legal action
• No advanced litigation take by non-FI
• No loans were taken from an institution not regulated by Bank Negara Malaysia

When you have enrolled in the DMP you have to:

• Give up your credit cards
• Change your lifestyle (modify budget/cash flow to live within means)
• Make dedicated and prompt payments

To know more about AKPK you can go to their website at http://www.akpk.org.my

4 Types of People to Avoid Using Credit Cards

Are you one of the following? If so, you should not possess credit cards. Here are the people and the reasons:

Gamblers: The best thing they can do is to give up gambling. With credit cards in hand, they will pile up debt in no time by credit card advances. They always think that by just one more bet they will be able to recover all the losses in the past

Materialistic: They want to keep up with the Joneses. They have to have the latest in a TV set, cell phone and sound system at home. Unfortunately, there is no way to keep up with the trend, because manufacturers are churning out the latest models almost every day.

Your credit cards have spending limit but there is no limit on what you want in life.

What they need are debit cards or prepaid cards and not credit or charge cards

Shopaholic: They are addicted to shopping. They can’t stop the compulsive nature to just shop and shop. What they need is counseling to get rid of the unhealthy habit and not credit cards.

Young graduates: They have just landed on their first job and they have also acquired their first credit card. They are excited to get their first spending experience on their credit cards. They were told not to worry about overspending because they could just pay the minimum amount. They do not realize that they are building up debt and leading their way to bankruptcy. What they need now are debit cards or prepaid cards to control their spending

If you think you can manage your spending within your budget and you want to pay the full amount promptly every month, go ahead and get yourself a charge card or a credit card.

Related post:

4 Types of Plastic Cards to Make Purchases

4 Types of Cards for 4 Types of People

10 Tips to Get Extra Cash Instantly

You have exhausted your emergency fund. And you have almost overdrawn your current account and there are only a few dollars left in your savings account. You need extra cash. First, identify internal sources of funds where you don’t have to incur charges or interest before you get funding from outside sources. Here are the ten sources of fund:


1. Cash your fixed deposits: Sacrifice your interest for premature withdrawal of your fixed deposit. Take out the amount you need and deposit the rest into your savings account.

2. Your children’s savings accounts: There are substantial savings over the years in your children’s savings accounts. You may withdraw but remember to top up later.

3. Liquidate part of your investment: Look into your stocks, shares, and unit trusts. Sell a small part of it to meet your cash requirements

4. Staff advance from your company: Salary advance is the quickest way to get cash without interest and charges. However, the amount will be deducted at the end of the month when you get your pay.

5. Cash value of your life policies: There is cash value in your life insurance policies. You can get a policy loan against the cash value. In fact, if one of the policies is investment-linked just do a partial redemption and you don’t have to repay. The policy is still in force.

6. Get a loan from your friends or relatives: You have to be thick-skinned. It is embarrassing to let your friends and relatives know your predicament. To maintain goodwill when you repay the loan, add a little extra.

7. Pawn your valuables: Don’t let those you know see you at the pawnshop. You can pawn your jewelry to meet your temporary needs

8. Get a personal loan from a bank: It may not be as fast as you think, but the banks are looking for people with good credit standing to give out personal loans. Be one of them. Interest will be charged to your loan and you have to repay in monthly installments

9. Get an advance from your credit card: You get immediate cash at a higher cost than a loan from a bank. You will be slapped with an advance fee and compounded interest as long as the amount is outstanding.

10. Borrow from a loan shark: This is the last resort. The interest rate is exorbitant. You have to make very sure to pay back fully on time or else this will be the beginning of your nightmare.


The best thing to do, however, is to earn some extra money to meet your cash requirements.

4 Types of Cards for 4 Types of People

There are 4 types of cards that you can use to make purchases. They are charge cards, credit cards, debit cards, and prepaid cards. Each type of card is specially catered to different people.


Charge Card: This type of card has no credit limit and you have to pay the amount fully when the statement arrives. It is for the rich and famous. They have spending power beyond the credit limit and they are capable of settling the amount fully upon receiving the monthly statements. Their lifestyle demands a card that they can spend freely and it is only limited by their spending power as demonstrated by their spending pattern. American Express is such a card.

Credit card: People who can exercise self–restrained will find this type of card useful. They don’t do impulse buying and they limit their purchases to what they need and not what they want. They pay promptly and fully and not just pay the minimum amount. They incur no late charges and finance charges. Visa and MasterCard fall into this category

Debit card: This type of card is suitable for young graduates who have secured their first job with decent pay and they want to have their first experience of using a credit card. The card is linked to their current or savings account so they will not overspend. They don’t run the risk of building up debt. You can’t use the card when your fund is exhausted. Visa and MasterCard are the issuers for this type of card.

Prepaid card: This type of card is for people who are budget conscious. They load the card with a specific amount for specific purposes and they spend accordingly. There is no overspending and there is no debt. You can get this type of card which is also issued by Visa and MasterCard.


Choose an appropriate card to suit your current lifestyle.

Credit Cards and the Malaysian Budget 2010

With effect from January 1, 2010, principal cardholders and supplementary cardholders of credit cards and charge cards will have to pay an annual service tax of RM50/- per card and RM25/= per card respectively. More and more people are using credit cards in Malaysia. The number of credit cards in circulation has increased from two million in 1997 to eleven million in August this year. This does not include 285,000 charge cards in use. Service tax of RM50/= was previously imposed with effect from January 1, 1997, and abolished on April 1, 2001. The latest service tax is to promote careful spending among Malaysians.

Credit card transactions growth dipped to 6 percent to RM38.9 billion in the first seven months of the year, compared with an 18.2 percent increase in the same period last year,

Individuals with credit card related debts seeking the services of the central bank’s Credit Counselling and Debt Management Agency increased by 38.6 percent to 7492 from a 75.9 percent growth to 5406 in the same seven-month period last year. These accounted for 74 percent of total cases under the Debt Management Programme.

For those people who are holding 5 or 6 cards, it means an extra expense of RM250/= to RM300/=.just to keep the cards. It is time for them to reduce their cards to not more than two. Too many cards mean too much temptation to overspend and too many cheques to issue to settle debts from too many banks.

Credit Card is a Lucrative Business

Financial institutions make money from cardholders all the way from the moment they receive their cards until the day they close their accounts. Furthermore, banks charge merchants a fee for accepting credit cards as payments for each and every credit card transaction.

Let’s take a look at all the credit card charges imposed on cardholders:


1. Annual fee: An annual fee of around RM150 is charged to your card every year.

2. Cash advance fees: 5% of the amount drawn, subject to a minimum of RM15/=

3. Late payment charge: 1% of the total outstanding amount, subject to a minimum of RM5/= and a maximum of RM75/=

4. Returned cheque fee: RM50/=

5. Finance charge: Finance charge for cash transaction is 1.5% per month or 18% per year. The finance charge for outstanding amount is between 13.5% and 17.5% per annum.

6. Replacement card: RM10/= for the first time and RM50/= for every subsequent replacement

7. Request for card statement: RM5/= per monthly statement

8. Request for sales draft: RM15/= per copy

9. PLUS/CIRRUS ATM withdrawal: RM10/= for each cash withdrawal.

10. PLUS.CIRRUS account enquiry: RM2/= for each transaction

11. Conversion for overseas transactions: The bank will impose a 1% administrative fee.

12. Closing of account: RM10/= upon closure of credit card account with credit balances.


As for merchants who have signed up to accept credit cards as payment they are charged a merchant fee or a discount fee of around 2% for every sale transaction. A merchant with a monthly sales volume of, say, one million, a bank will deduct RM20, 000/ =.and remit the balance of 980,000/= to the merchant. Can you imagine the amount of fees banks can collect from retail chains like Giant, Carrefour, and Tesco every day?

In order to avoid all these charges, as a cardholder, you have to make sure that you make payment promptly and fully every month and you have to take care not to issue a bounced cheque.

5 Tips to Choose a Credit Card

All the banks are going after you to sign up for one or more of their credit cards. How do you determine which one is best for you? Consider the following 5 points to make up your mind:

1. Free For Life: Look for a card without charging annual fees. CIMB Petronas MasterCard is such a card. You can save around RM100/= to RM200/= per year.

2. Low-interest rate: Check around to determine which card charges the lowest rate in interest on outstanding amount. This is not an important consideration when you pay credit card bills fully on time.

3. Rewards or cashback: You have to decide which one is your preference. Would you like to accumulate points to redeem for goods or you prefer to pay less with cashback or rebate? For me, I would like to pay less at the end of the month to reduce my expenses and cash outflow.

4. Gas, airline miles, or grocery card: It all depends on which one you use the most. When you are always on the road, get the CIMB Petronas MasterCard. When you do a lot of grocery purchases get the Giant-Citibank Credit Card You pay less when you use both cards for your petrol at Petronas and sundry purchases at Giant. If you are a frequent flyer you may wish to consider Air Asia Citibank Card and accumulate points and fly for free later.

5. Customer satisfaction: According to J.D. Power and Associates’ report about 2009 Customer Satisfaction With Credit Cards, they have identified the six key factors of interaction, fees and rate, billing and payment process, rewards, benefits and services, and problem resolution. American Express ranks the highest among credit card issuers for a third consecutive year. Get a card with a financial institution that gives you the most customer satisfaction.

When you have a card, use it wisely. A credit card is for convenience and savings and not for credit. Pay fully and promptly every month to stay out of credit card debt

7 Tips to Prevent Identity Theft

According to Wikipedia identity theft is a term used to refer to fraud that involves someone pretending to be someone else in order to steal money or get other benefits. The term is relatively new and is actually a misnomer, since it is not inherently possible to steal an identity, only to use it. The person whose identity is used can suffer various consequences when he or she is held responsible for the perpetrator's actions.

How do you prevent identity theft? Here are the top tips:

1. Your expired credit cards: Destroy not only your card but the chip as well. Cut your cards into pieces so that nobody can pick up any clues by rummaging through your trash.

2. Review your monthly statements: Check your monthly statement to ensure that all charges tally with your records. Notify the bank when you don’t receive your monthly bank or credit card statements.

3. Use your credit cards with care: Make it a habit that transactions are done in your presence; this is to avoid fraudulent uses of your cards.

4. Personal information: Do not give away personal information over the phone easily especially those relating to your credit cards and passwords.

5. Shop online with care: Shop only at secure sites, such as https:// with an ‘S’.

6. Check your credit status: Get your free credit reports online from Equifax, TransUnion, and Experian or CTOS in Malaysia.

7. Keep your personal documents in a safe place: Your personal identification card can be subjected to fraudulent uses if lost. Your lost card can be used to obtain a bank loan by someone else and the crook allows the loan to default. Eventually, you are declared bankrupt without your knowledge. That is why you need to check your credit status from time to time.

Handle your credit cards and personal identification card with care to avoid needless identity theft.

Credit.com – A Website for Financial Products and More

Credit Cards

Credit.com, a company based in San Francisco. CA. was established in 1995 serving as an educator, advocate, and facilitator. It provides information about money, credit, loan, and more. Here are the services provided by Credit.com

Credit cards: You can get your credit cards by credit score or based on rewards such as airline miles and reward points. You can also choose between cash cards and gas cards or prepaid cards. There are also secured cards, business cards, and student cards.

Credit scores and reports: You can have a free trial of 3 credit reports and 3 credit scores from Equifax, Experian, and TransUnion

Online banking and savings: You can compare savings rates from leading financial institutions and open an account online

Loans: You can also shop for personal, emergency, auto, home, or student loans here.

Debt help: Credit.com offers free debt consultation. They also offer assistance in tax and bankruptcy issues.

Knowledge and education: There is a credit learning center and you can get answers from the credit, real estate, lending, and legal experts. You can find useful articles on their blog about the financial world and participate in their forum

Credit.com is the place to be enlightened and gain knowledge about financial products before you make a decision for the most suitable product for you.

Financial Freedom - 7 Successful Steps

In order to achieve financial freedom, you need to, first of all, find out your current situation. When you are in debt especially credit card debts you need to settle those debts before you can start saving because the interest from the savings is very much less than the interest charged to your credit card's outstanding balance. Let’s look at the steps to be taken to gain financial independence:

1. The root of the problem: You can start paying off your debts especially your credit card debts but if you continue to adopt a lavish spending lifestyle, there will be no end to it. Find out if you are spending on what you need or what you want. Stop buying unnecessary items and be happy with what you have. You are one step nearer to reach your money goals when the problems are identified and you put a stop to it. If you are unable to give up your impulsive spending habit by using credit cards, the best thing to do is to cancel all the credit cards.

2. Allocation: Allocate an amount for essential items every month to cover food, petrol, children's education, housing loan, and utility bills. Stop spending any more on what you want.

3. Debt settlement arrangement: Look at all the credit card outstanding amount and other debts and use whatever money that is left to reduce your debts. Start by settling the debt with the highest interest rate. Select to settle a smaller outstanding amount from your debts. By doing so it gives you relief that you have settled one of your debts and give you the motivation to settle the rest.

4. Add new sources of income: You can do it right at home like I do. I write articles and I collect earnings from AdSense, though the amount is small. Two points to note here. With the additional income you can pay off your debts faster and you can set aside an amount for emergency from the extra cash.

5. Pay yourself first: When you are out of debt you can now put aside an amount every month. If you can’t do it all by yourself then you take up an investment-linked insurance policy to force yourself to save.

6. Time is an important factor in savings: The wonder of compound interest will help you to make your savings grow. The more you can save and the sooner you start the easier it is to reach your saving goals.

7. Invest your savings: When you have accumulated a substantial amount you can start looking for investment channels. This is an area that you need to be careful or else your precious savings will vanish in the air. Traditionally, you can invest in blue chips, unit trusts, and properties in selected locations.

Summary

First of all, you need to identify your financial problems and you put a stop to them. Is it unnecessary spending on your credit cards or is it your gambling habits? Spending on what you want will lead to more debts. Always set aside an amount to cover monthly expenses and pay off your debts with the balance. At this juncture, you can't start saving yet. The interest from your debt is very much higher than the interest you can earn from your savings. Pay the highest interest debt first but chose a debt with a smaller amount. You will get a little relief when one of the debts is settled. Try to supplement your income to reduce your debts faster and start earlier to save. When you are unable to discipline yourself to save, arrange with the bank for a standing order to pay monthly for, say, an investment-link insurance policy, When you have substantial savings you can look for investment avenues to give you a better ROI (return on investment). You gain financial freedom by taking these steps diligently.

Source: Financial Freedom- 7 Successful Steps

How a Credit Card Transaction is Processed

It takes only a few seconds to scan your card and the transaction is completed and you are on your way home with a new pair of sneakers. However, in that few seconds, information passes swiftly from one party to another to get approval for your transaction. Here is how a credit card transaction is processed:


1. You produce your card to charge the purchase. The merchant scans your card.

2. A request is sent to the merchant’s bank for the transaction.

3. The merchant‘s bank sends another request to the issuing bank of your card to obtain authorization of the transaction.

4. An authorization code is sent to the merchant’s bank when the transaction is in order.

5. The merchant is notified and a slip is printed for the cardholder to sign and another slip is printed for the cardholder to keep. The transaction is completed successfully.

6. The merchant keeps the transaction and other transactions for the whole day and does a batch at the end of the day and transmits it to his bank for settlement

7. The batch is sent through the card network such as Visa or MasterCard to request payment from the issuing bank.

8. The issuing bank deducts a fee which is shared with the card network and transfers the balance of the amount charged through the network to the merchant’s bank.

9. The issuing bank debits the cardholder’s account for the full amount charged and obtains payment from the cardholder in due course.

10. The merchant receives the amount from his bank less a discount rate.


A simple transaction but a complicated way for the merchant to get it approved and finally receive the fund fewer charges (around 2%).

3 Ways to manage your money to avoid bankruptcy

Bankruptcy

According to figures released by the Malaysian government, from 2005 until June this year the following categories were the top cases in the number of people declared bankruptcy:


Unable to settle car loan 15176 cases (23.69%)

Unable to settle commercial loan 6949 cases (10.85%)

As guarantor 6244 cases (9.75%)

Unable to settle personal loan 6129 cases (9.57%)

Unable to settle credit card debts 3767 cases (5.88%)

Owning to income tax 660 cases (1.03%)

Housing loan default 214 cases (0.33%)

Educational loan 138 cases (0.22%)


Out of the 8 categories, 6 categories were relating to people who were unable to manage their personal finance. How do you look after your own money to avoid being declared bankrupt?


1. Live within your means: Before you decide to obtain a car loan or a personal loan you must factor in the amount payable each month within your monthly budget. When you work out the sum and you find that your outflow (household expenses, car loan or personal loan repayment, and all other commitments) is more than your inflow (your earnings) you are not in a position to raise the loan. Avoid the temptation and forget about getting a new car or getting a personal loan to beautify your house.

2. Credit card: Credit card is not a source for getting credit. It is only a convenient way to make payments. You still have to earmark and set aside a sum to meet the payment that you have charged to your credit cards. Again, the amount that you are about to charge has to be included in your monthly budget. If it is out of your monthly budget don’t use the card and restrain yourself from getting materialistic. Another point is that it is wise to settle the amount fully and promptly when you receive the monthly statement from the bank. If you don’t, you will incur late charges and finance charges and the amount will snowball. Bankruptcy is the outcome as confirmed by the number of cases stated above.

3. Self-discipline: Don’t keep up with the Joneses. Do not attach yourself to material things. Enjoy what you have and be happy. Keep your reputation clean because people remember you more as bankrupt than an ordinary citizen.


A debt-free life is a carefree life. You go to sleep soundly every night knowing fully well that nobody is going after you for money.