10 Wise Ways to Choose a Credit Card

You are unique, so is your choice of a credit card. Your financial background dictates your lifestyle and the type of card to suit your needs. However, from the standpoint of a smart consumer, you should wisely consider the following salient points.   

    

1.      Type of cards: If you are in college you should consider using a cash card or a debit card instead of a credit card and get the hang of a plastic card without worrying about incurring credit card debt.  If you are one of those rich and famous people you should be using a charge credit like American Express. It has no credit limit and it is only limited by your financial resources. You are not given credit and you have to pay the full amount when you receive the monthly statement. For the rest of us, we can opt for a Visa or MasterCard.

2.      Free for life: Look for a card with no joining fee and no annual fee. Why pay extra when you can get a card for free?

3.      Lifestyle: Your lifestyle determines your preference for a credit card. When you are on the road a lot, a petrol credit card would be handy to control your travelling expenses. If you are a frequent flyer, a flight and lodging credit card would suit your way of life. I enjoy going to the movies, so I get a GSC Hong Leong Bank Visa Card and pay less for my entertainment expenses. It is a good idea to have a shopping credit card to reduce your grocery expenses.

4.      Carry two cards: It is prudent to carry two cards; one for Visa and another one for MasterCard just in case one or the other cannot be accepted for whatever reasons.  

5.      Choose a friendly financial institution: It is good to choose a card issuer that you are familiar with. In case you need help, you get speedy and satisfactory assistance.  

6.      Benefits: Look out for benefits suitable for you. One such benefit is a balance transfer. Are you carrying too many cards with huge balances? Look for one card to consolidate your debt with zero interest transfer for the longest period to ease your financial burden. Are you purchasing a big-ticket item, get a card with a zero-interest installment plan for the longest period.   

7.      Security: Get a card issuer usually a bank that is able to notify and alert you for unusual transactions promptly. It could be a genuine transaction, but it is reassuring to know that the bank is on top of things. 

8.      Low-interest rate: Get a card with the lowest interest rate just in case in one particular month you are unable to pay the full amount you will not be impacted with high interest for the outstanding balance. I always advocate credit cards are for convenience and not to obtain credit and incur debt. If one fine day you get into financial difficulties and default your repayments, your name may be black-listed in Central Credit Reference Information System (CCRIS) or CTOS, a credit reporting agency in Malaysia, or worst still you become bankrupt.

9.      Penalty charges: Issuing of credit cards is a lucrative business for financial institutions. You are charged for joining fee, annual fee,  interest for late payment, interest for outstanding balances, cash advance, replacement of lost card, just to name a few.    Get a card with fewer penalty charges or for a smaller amount  

10.  Cashback or rewards: With a cash-back card you pay less every month. With a reward card, you can accumulate points for the amount you spent and redeem for goods. The choice is yours. 

In Malaysia, go to iMoney.my to select a card to match your requirements

Protect Your Belongings with a Householder Policy

A householder policy, like a homeowner policy, covers loss or damage to your contents or movable possessions caused by the following perils:

Fire, lightning, and explosion caused by gas for domestic purposes

Aircraft

explosion (other than gas used for domestic purposes)

Road vehicles or animals

Bursting or overflowing of water tanks or pipes

Electrical Installations

Windstorm, tempest, earthquake, volcanic eruption, and flood

Theft with violent forcible entry or exit

Loss of rental

Liability to third parties for accidents in your property

Compensation for the death of the insured.

You may wish to cover the following perils which are excluded in a standard policy:

Subsidence and landslip

Riot, strike, and malicious damage

Please ensure that the sum insured is adequate. You should decide on the basis of compensation for your householder policy, whether it is on reinstatement or the replacement value. You will be compensated with the value of a brand new item under a reinstatement basis but on the depreciated value of the item lost under a replacement basis. Do extend selected coverage to perils excluded in a standard policy.

To facilitate claim in case of a fire or other perils, keep your bills and receipts together with photographs of all household items in a safe place. I would suggest that you back up your documents in the cloud using a cloud storage provider such as Google Drive or iCloud. If you keep your documents at home and save them in your hard drive, laptop or iPad, in the event of a fire, they may be destroyed and you cannot produce documentary evidence to substantiate your claim. According to an article, Top 20 reasons your insurance claims get rejected, At the claims stage, some insurers want proof of purchase, such as an invoice. Be aware that the onus is on you to prove your loss,” he says. Jooste advises that you take photographs of each item in your home and save them to a disc or external hard drive.

Conclusion: 

Cover your home and its contents with a house owner policy and householder policy respectively. Make sure the sum insured is adequate; get an extension to cover perils excluded in a standard policy and include such expenses like the removal of debris after a fire.  

Is Your Home Adequately Insured?

After taking up a house owner policy for your house, you think you are fully covered in the event of a fire? I must say that most likely it is not. There are three aspects of a house owner policy to consider if you want to be fully covered:

·         Sum insured

·         Additional perils

·         Other expenses

Sum insured:

You should insure your property on a reinstatement basis instead of indemnity because coverage on reinstatement is the actual cost to rebuild your house after a fire. You do not want to insure the actual price you previously paid which is insufficient now due to inflation. You have to find out from a reputable building contractor the cost involved to rebuild a similar house that you are occupying excluding the cost of land. If you do not insure fully you will be compensated proportionately.

As an example, the cost to rebuild a similar house of yours is $200,000 and the sum insured of your houseowner policy is only $150,000 you are deemed to be self-insuring the difference. During a fire, say, you suffer a loss of $10,000, you will be paid:

Sum insured $150000 x Loss $10000/Rebuilding cost $200,000 =$7,500  

Additional perils

A normal house owner policy will cover your building, including its fixtures and fittings, garages, walls, gated, and fences. The main perils covered are:

·         Fire, lightning, and explosion caused by the gas used for domestic purposes.

·         Aircraft damage

·         Explosion (other than gas used for domestic purposes)

·         Road vehicles or animals

·         Bursting or overflowing of water tanks or pipes,

·         Electrical installations

·         Windstorm, tempest, earthquake, volcanic eruption, and flood

·         Theft with violent/forcible entry or exit

·         Loss of rental

·         Liabilities to third parties for accidents in your property

You need to extend the coverage of the house owner policy to include the following:

·         Riot, Strike & Malicious Damage

·         Subsidence and landslip

These are excluded from a normal house owner policy, In case of damages caused by, say, riot, strike, and malicious damage your houseowner policy is not enforceable.

Other expenses

After a fire, you have to think of the additional cost involved in removing debris. To rebuild your house will also involve architects, surveyors, and consulting engineers’ fees. These are not in your standard houseowner policy. Therefore the sum insured for your houseowner policy you have to add these expenses.  

Conclusion:

You should take up both houseowner and householder policies to obtain a comprehensive cover for your home and its contents. However, you have to make sure that the sum insured is sufficient. Find out what perils are excluded in the policy that you need to extend coverage.  

iMoney.com – The Best Financial Website in Malaysia

Do you know:

Which financial institution offers the best shopping credit card?

Which bank gives you the highest interest rate for a fixed deposit?  

Where to get the cheapest housing loan?

You can get the answers plus information on other financial products such as personal loans, debit cards, personal accident insurance, travel insurance, gold investment, and share trading accounts from a comparison website at iMoney.my. It is a very popular website with an Alexa Traffic Rank of 54000.

From the website, I can see that

HSBC Visa Reward is the Best Shopping credit card because it earns up to 8x Reward Points from retail spending.

HSBC Amanah MPower Visa Platinum is the best Dining credit card. You earn up to 8% cashback on petrol, groceries, and dining.

Citi Bank offers the lowest interest rate for a personal loan at 7.68% (effective interest rate of 14%) 

Am Bank, Hong Leong Bank, and Kuwait Finance House Offer the lowest interest rate at 4.2% for a housing loan.

Bank Rakyat offers the highest interest rate at 3.65% for six months of fixed deposit.

Etiqa motor Takaful is the best insurer for motor insurance.  Their insurance is renewable entirely online.

You can also check out the best deal about mobile data plans from Maxis, Digi, Celcom, and U Mobile

Besides comparing financial products you can go to their Learning Centre and read about informative articles and study their Infographic. Best of all, there is a free ebook, 12 Ways to Save Money in Malaysia, to download.

Interested to make some money? You can even join their affiliate program to earn extra cash by promoting their services on your website.  

Conclusion

Visit this website first when you are looking for a financial product. You will be able to get the best deal by comparing different brands of a similar product. 

Are You A Victim of Identity Theft?

How do you know that you are not a victim of identity theft? Have you checked your credit report?

In Malaysia you can get a Self Check Report from Credit Tip-Off System (CTOS), CTOS is a credit reporting agency in Malaysia established since 1990 under the ambit of the Credit Reporting Agencies Act 2010.

CTOS gathers information pertinent and relevant to their credit reporting business mainly from publications of legal proceedings in newspapers and government gazettes, the Companies Commission of Malaysia, the Insolvency Department of Malaysia, and subscriber contributions. It maintains information on legal proceedings against individuals and business entities in Malaysia. If there is a bankruptcy suit against an individual or a company, CTOS will collect and register this information into its database.

You can apply for a self-check report at CTOS through registration at their office or through online registration.

In your Self Check Report It is divided into 5 sections:

Section A: Identity Verification Guide

Section B: Internal List/Group Exposure

Section C: Directorships and Business Interests 

Section D: Summons, writs, bankruptcy proceedings, foreclosure, etc

Section E: Trade References

What to watch out for:

Check Section C to see if your name is listed as a director in a company. If you do not own a business it means your identity has been stolen and used by somebody else to run a business in your name. As a director of a company, you are responsible for the affairs of the company and liable for its misconduct.

When you are listed as a director in section C, your name most likely will appear in Section D as a bankrupt. The person who has stolen your identity is only interested to obtain loans from financial institutions. Once the perpetrator absconded with the money you are held responsible for his or her activity. Even if your name is not listed as director, a perpetrator still can “borrow” your name to obtain personal loans or car loans.

Usually, people will only discover their credit status to their surprise and horror when they apply for a loan or receive a bankruptcy proceeding against them.   

Go and obtain a copy of your credit report and straighten your record if it is inaccurate. 

Conclusion:

The credit report from CTOS is to find out if you are involved in any legal proceedings. If you are interested in your credit rating or creditworthiness you need to obtain another credit report from the Credit Bureau of Bank Negara Malaysia. The Central Credit Reference Information System (CCRIS)  is the computerized database maintained at the Credit Bureau.  A CCRIS report contains factual and historical information on the loan amount, interest, and charges outstanding on each loan (like housing loan, personal loan, hire purchase, credit card, and overdraft). It also shows the amount of each monthly payment to be in arrears to the bank for one year (12 months). By having this CCRIS report, the financial institutions can assess your credit rating by analyzing each loan by the loan balance and payment record of the loan.

10 Benefits of a Life Insurance Policy

A life policy is a valuable document. It is more than an instrument to compensate for the loss of life of the insured or earning power because of an accident or illness. You can wisely consider the following benefits:

1.      A form of savings and investment: You develop a regular saving habit. Wealth building starts with savings accumulated over time.   

2.      Tax-deductible: Life insurance premium is usually a tax-deductible item. In Malaysia there is a personal tax relief of RM6000; however, this amount is inclusive of your share of contributions to Employees provident fund.  

3.      A source of cash: As time passes by, your policy builds up a reserve of a fund and you can withdraw its cash value in case there is an urgent need for cash.

4.      A pledge for a loan: You can also pledge your policy and apply for a loan. As it is a loan you will have to pay interest for the loan amount.   

5.      A source of fund for the next-of-kin: Perhaps it is your aim to create wealth for your immediate family. A life policy is usually for this purpose.

6.      Funeral expenses: Upon the maturity of the policy or the untimely demise of the insured, part of the policy proceeds will pay for the deceased’s funeral expenses.  It is a wise move to avoid your immediate family to shoulder such cash outflow. 

7.      Settlement of outstanding debt such as a mortgage or personal loan: Upon the premature death of the insured, the proceeds of the policy can be used to settle the deceased’s credit card and personal debt. An MRTA policy will be conveniently used to settle outstanding housing loans in the name of the insured.  

8.      Children’s education: It is yet another wise move to purchase a policy and save for your children‘s future education. The maturity date will coincide when your child enters university.     

9.      Retirement fund: An insurance policy is also a good source of a retirement fund. You can time the maturity date of the policy to match the commencement of your retirement.

10.  Financial support of your family: To avoid financial strain to your immediate family an insurance policy will be a source of a fund when you are the only breadwinner upon your untimely departure as a result of an accident or terminal illnesses.   

There are many types of life policies:

Term Life Insurance: When the policy expires it has no cash value, but it offers maximum protection with minimum cost for a stated period. A death benefit will be paid when the insured dies or suffers total and permanent disability while the policy is still active.  This type of policy is to replace your earning power and create a source of fund for yourself or your immediate family    

Whole Life Policy: This form of policy is to create wealth for your next-of-kin because you are paying the premium for your whole life until you pass away or are permanently disabled.

Endowment policy: The policy offers protection as well as savings for a specific period and for a specific purpose. The fund may be needed for your marriage or a down-payment for your house.

Investment-linked insurance: It offers protection and a chance to invest by participating in units in a fund managed by the life insurance company. The value of your fund goes up or down subject to market forces.

Child education policy: As the name implies it is a policy to cater to your child’s education.  

Medical and health: It has no cash value, but it is an essential expense item.  Medical and health insurance is designed to cover the cost of private medical treatment, which can be very costly, especially with hospitalization and surgery. MHI also ensures that you won't have to worry about the cost of seeking treatment during emergencies. In addition, MHI also provides you with an income stream while you undergo treatment.

Retirement Annuity: It is to ensure that you can depend upon a steady source of income during your retirement. Bear in mind that the income payments you receive will depend on the amount you pay to purchase the annuity, your age when you purchase the annuity, and your gender.

Mortgage reducing term assurance: It is a policy to cover the repayment of an outstanding property loan to the financial institution in the event of untimely death, disability, or critical illness of the borrower.

Conclusion:

You will consider and purchase suitable policies to suit your requirements.  

Can You Afford to Buy a Car?

According to a news item, Driven to bankruptcy, it is reported that Those who defaulted on car loans continue to top the list of bankrupts, and their numbers are increasing every year. Easy-to-get car loans have driven more Malaysians into bankruptcy, with the numbers soaring, especially in the last six years. Of the more than 100,000 people declared bankrupt between 2005 and September this year (2011), 25 percent comprised those who had defaulted on their car loans.

When you decide to buy a car, consider the following:

1.      Down payment: Do not settle for the minimum amount because the more you make the initial payment the smaller will be the loan amount and the less interest you will pay. Save more for a bigger down payment.  

2.      Monthly installment: Have you factored in the monthly installment payment into your monthly budget? It is going to be featured in your cash outflow for a couple of years. Your take-home pay must be able to accommodate this amount apart from the usual household and other expenses.  

3.      Toll charges, parking, and petrol: These items will be additional expenses and you also need to allocate a fixed amount in your monthly budget.  

4.      Insurance premium and road tax: It happens once a year but you need to save an amount every month so that when it is due in a year’s time you will have enough money to cover these mandatory expenses. 

5.      Regular maintenance: Your car needs to maintain regularly like changing engine oil and oil filter and not to mention other replaceable parts. Again it is prudent to save an amount on a monthly basis to meet such expenses.

6.      Wear and tear: Items like tires and battery may last longer but these major items will need to be replaced one fine day. Can you afford not to save a sum of money to cover such expenditures?

7.      Preserving the value of your car: Your car needs your attention. You need to tidy the interior and wash the body regularly to preserve the shine and glitter. Is your car going to be left outdoor under the scorching sun and the acidic rain? The value of your car will depreciate faster without proper care. You have to drive with care and avoid an accident and getting dented or scratched here and there.   

Do your homework:

Just fill in the chart to see if you have an excess of income over expenses or there is a shortfall of income in meeting your monthly expenses:

MONTHLY BUDGET
	$
INCOME
TAKE HOME PAY
OTHER INCOME
TOTAL (A)
EXPENSES
GROCERY EXPENSES
CHILD ALLOWANCE
INSURANCE
MORTGAGE
ENTERTAINMENT
CAR LOAN
PETROL, PARKING & TOLL
MOTOR VEHICLE RELATED EXPENSES
EMERGENCY FUND
UTILITY BILLS
SAVINGS
OTHER EXPENSES
TOTAL (B)
EXCESS/SHORTFALL OF INCOME OVER EXPENSES (A-B)

Remark:

Motor vehicle-related expenses is an amount to save every month to cover road tax, insurance, maintenance expenses, and other major replacement items       

If your total cash outflow is more than your income, you can forget about getting a car.

Conclusion

A car offers great convenience going places. Maintaining a car is a different story. Consider all expenses involved before driving away from a  car from the showroom. Your excitement can be short-lived and what you actually get is financial burden and misery   

How I Manage Three Credit Cards Without Incurring Debt

Credit cards are different from charge cards like American Express and Diners. For charge cards, you have to pay in full when it is due. For credit cards as the name implies you can get credit by paying a minimum amount of 5% or RM50, whichever is higher, and carry forward the balance to the following month with a finance charge of 18% per annum. However, the danger is that you are incurring interest for the outstanding amount.  When you are not careful, the outstanding amount snowballs with compound interest over time to an amount beyond your means. You may end up as a bankrupt. A credit card is a double-edged sword.   It is useful and yet financially destructive.

I have three cards: CIMB PETRONAS MasterCard, Hong Leong Bank Platinum Visa card, and Hong Leong Bank GSC Visa card. I allocate different usage for each card so that all three cards stay active.

This is how I use the three cards to my advantage:

CIMB PETRONAS MasterCard: It is essentially a cash rebate card. When I pump petrol I charge it to this card. At the end of the month, I am given rebates on the amount spent. To maximize the usage of the card and pay less I charge all my utility bills such as telephone and electricity plus monthly insurance premium to this card. When you pay by cash you pay the full amount.

Hong Leong Bank Platinum Visa card: This is my grocery card. I use it in conjunction with The Store Card. I shop at The Store as it is situated next to my place of work. I charge all my grocery expenses to this card and collect reward points. At the same time, I present The Store Card, which is a membership card also to get points at one point for each Ringgit spent. Over time I redeem points accumulated to exchange for useful items. As for The Store Card, I can redeem for goods or their gift vouchers.         

Hong Leong Bank GSC Visa Card: This is my entertainment or movie card. I get discounts for the purchase of movie tickets. Right now there is a promotion going on for a year; I get a free ticket when I buy tickets on a Thursday to watch a movie on Thursday, Friday, or Saturday. You can take further advantage by joining   Golden Screen Cinemas (GSC) as a member so that during your birthday month you will get two movie tickets free. I also use this card for other purchases and big-ticket items and pay by their zero-interest instalment plan for 12 to 24 months   

Conclusion:

You will see that all the charges are my normal expenses every month. I don’t charge unnecessarily and I settle promptly and fully every month without incurring extra charges. I use my card wisely to reduce my expenses or maximize my spending and not to incur credit and build up debt.  

How many credit cards do you have and how do you manage your cards? Share with us.

10 Wise Quotes About Money

1.      You can be young without money but you can't be old without it.
Tennessee Williams

When you are young, you are fit and strong and you can be gainfully employed. When you are old, you are weak and frail and you cannot work anymore. You need to live with your retirement fund for your golden years.  If you don’t start saving early for your old age, life will be miserable.

2.      Lack of money is no obstacle. Lack of an idea is an obstacle.
Ken Hakuta

All you need in life is a unique idea that others are looking for. It can be in the form of products or services. You give others what they want and you will be able to build your wealth.   

3.      Never spend your money before you have it.
Thomas Jefferson

Living on credit is not a wise thing to do. You pay more than by paying in cash and you may not be able to honor your debt and end up bankrupt.

4.      It's good to have money and the things that money can buy, but it's good, too, to check up once in a while and make sure that you haven't lost the things that money can't buy.
George Horace Lorimer

Do not just think of money, there are other important things in life to take care of such as your health which money cannot buy.

5.      Wealth, like happiness, is never attained when sought after directly. It comes as a by-product of providing a useful service.

Henry Ford

 You don’t look for money directly. How much you can get is proportional to how much you can give to others in the form of services or products.

6.      Money will buy you a bed, but not a good night's sleep, a house but not a home, a companion but not a friend. 

Zig Ziglar

Money can buy you only material things, all other things you have to earn it like your reputation and the trust of others in you.

7.      He who gathers money little by little makes it grow. [Proverbs 13:11].

 Bible

The starting point to build wealth is savings. When it is done regularly over a period of time, compound interest will grow your money.  

8.      The man who does not work for the love of work but only for money is not likely to make money nor find much fun in life.

Charles M. Schwab

 You must like it and enjoy what you do. You are paid for what you can do for others by using your skills and know-how. The more you care about what you do, the better your work will be and the more money you will be able to earn. You can’t get money without putting in an effort to work and give your best.

9.      Money is a good servant but a bad master.  
Aristodemus

When you manage your personal finance effectively, you will grow your wealth. When you cannot discipline yourself and you overspend, you will get into debt. You will be a servant to the lender.

10.  Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like.
 Will Smith

It is prudent to live your own life within your means. Do not compare with others. There will always be others who are richer than you. Be contented, happy, and debt-free.

Source: 10 Wise Quotes About Money

10 Things to Avoid in Money Matters

Money may not buy you happiness but when you are financially independent you have less worry in life. The worst thing in life is not to take financial issues seriously. These are the things to avoid when money is concerned:


1. Not knowing your Net Worth: Not knowing what you own and what you owe means not knowing what to do to improve your financial situation. The most crucial issue is to settle the outstanding debt as soon as possible before it snowballs into a much bigger amount and go beyond your means to pay. 

2. No monthly budget: The purpose of a monthly budget is to spend within your income and to avoid incurring debt. Plan and follow your budget.

3. Do not settle credit card bills fully and promptly: The worst thing about using a credit card is to take the easy way out; that is to pay just the minimum amount. The outstanding amount will attract high-interest charges and the accumulation of more interest. It is very likely that it will lead to bankruptcy. 

4. Satisfy your wants on credit: Avoid spending on impulse to buy what you want on credit because you know very well that it is not within your budget. Exercise self-discipline and self-control to curb unnecessary expenditures.

5. No emergency fund: Not setting aside an amount for rainy days is inviting troubles if you are out of work for a few months. You have to borrow to meet your usual monthly expenses and recurring payments.

6. No insurance cover for disability: Do pass the risks to the insurers to cover yourself in the event that you are involved in an accident or suffering from critical illnesses. So when you are unable to work you can reimburse your medical bills and make claim to cover your disablement to work.

7. Spend more than what you have earned: Incurring debt is the only way to spend more than what you have earned. It is not a prudent thing to do.

8. Do not pay yourself first: Saving regularly is the starting point of financial freedom. Make it easy for you to save by deducting a fixed amount from your pay and deposit the money into a savings account.

9. No priority in money matters: The first priority is to settle outstanding debt. When you are debt-free the next thing is to save and invest and grow your money.

10. No financial planning for children’s further education and your retirement: The best time to start is now if you have not started doing so. Let time and compound interest work for you. Before you know you will have accumulated a substantial amount of money.


Personal financial management requires discipline, restraint, and control. The goal is to achieve financial freedom.

Source: 10 Things to Avoid in Money Matters