5 Things to Know About Credit Cards

Credit Cards

The right credit card can help you manage your finances.

When you're choosing a new card, it's a good time to be picky.

Shopping for a new credit card can be pretty overwhelming, especially considering you have hundreds of types of cards to choose from. Should you go for a rewards card, the lowest interest rate card you can find, or the card that comes with a free T-shirt? If you're trying to sort through all your options, consider these five tips that I recently shared on "The Tavis Smiley Show" from Public Radio International.

1. Use comparison websites. The myriad of credit card options today is matched by a slew of comparison websites that make it easier than ever to customize your search for the right card for you. Google's credit card search tool lets users narrow down their search by interest rate, rewards, and a dozen other factors. IndexCreditCards.com, Bankrate.com, CreditCards.com, CreditKarma.com, and NerdWallet.com all offer credit card search tools.

If you always pay your bill in full each month and never carry any debt, then you can take a closer look at the rewards options. Perhaps you prefer cash back to airline miles or points that let you make purchases at retailers such as Best Buy (BBY) or Home Depot (HD). If you do carry any debt, though, then you'll want to focus on minimizing the APR, or annual percentage rate. Just don't sign up for the first offer you get in the mail because it might not be the best one for your situation.

2. Check up on the extra protections that come with your card. Credit cards come with various forms of protection, including theft, non-delivery of items from a company, and even extended warranties. If you travel a lot, then you might want to focus on cards that come with travel perks like insurance; if you buy a lot of large electronics, then the extended warranty protection might be for you. If you're a big shopper, the price protection, which offers to make up the difference if an item you buy drops in price, could be your best bet. The important thing is to read the fine print, ask questions so you know what perks come with your card, and pick the card that has the benefits that are important to you.

3. Don't be tempted by freebies. Credit cards sometimes offer tempting short-term benefits, including token gifts like T-shirts or a temporary zero percent APR. For the most part, you don't want to get sidetracked by these offers because they mask the far more important factors, namely the interest rate and any relevant fees. In fact, you should probably ignore introductory gifts altogether because you'll have your card for longer than you'll enjoy the added freebies. You can buy your own T-shirt later.

4. Avoid rewards cards unless you carry zero debt. On average, rewards cards carry higher interest rates than non-rewards cards. According to IndexCreditCards.com, the average interest rate on a consumer rewards card is currently 17.64 percent, and the average rate on a non-rewards card is 15.48 percent -- that's a full two percentage point difference. It might not sound like much, but if you're carrying debt each month, then you want to make sure you're paying as little as possible for it. (Along with developing a plan to pay it off in full as soon as possible.) Any rewards are not worth the extra interest payments.

5. Rates and fees can be negotiable, so always ask. Credit card providers are sometimes more flexible than you might think. If you're a good customer with a strong credit history, then you might have some leeway to ask for a lower interest rate or for an unexpected fee to be removed. You can sometimes negotiate better terms for yourself, especially if you're a good customer who pays on time. There's no harm in calling up the customer service representative to ask what they can do for you.

The bottom line: You want to make sure your credit card is working for you, and not vice versa. Pay off your bill each month so you're not carrying any debt, and take advantage of the free rewards coming your way. If you do have debt, make a plan to pay it off, because the high-interest rates on credit cards add up quickly over time.

5 Credit Cards That Give 5% Cash Back

This is a guest post by Mike, the owner, and operator of CreditCardForum. There you will see his ratings of the best credit cards for 2012 (for U.S. residents). What follows are 5 of his favorite cashback cards for people who live in Malaysia.

For those who carry a balance, credit card rewards should not be a priority. Why? Because the interest rate you are paying is likely many times higher than the value of your cash back or points. So if you carry credit card debt, your focus should be on finding the lowest APR possible.

However, for those who pay off their entire credit card bill every month (and therefore pay no interest) then reward programs are a lucrative proposition. It’s like getting free money. But which programs pay the most? Well here are 5 credit cards available in Malaysia that give you rewards worth up to 5%.

1. Citibank Cash Back Platinum Card

I wish I lived in Malaysia so I could take advantage of this offer, because Citi doesn’t offer anything this good in the United States!

You earn 5% cashback on petrol (or as I call it, gas) spending up to RM600 per month. For groceries, you earn 2% on up to RM3,000 spending each month at selected stores (Servay, Econsave, Carrefour, Tesco, Cold Storage, Everise, Giant, and Mydin). There’s also a 2% rebate at some pharmacies (Caring, Guardian, and Watson) and CitiBank online payments for Celcom, DiGi, Maxis bills. Everything else will earn you a flat 0.3%.

However, the downside is that this card will cost you RM195 per year. So if you don’t spend much, it might not be worth it. The income requirement is RM40,000 per year.

2. HSBC Visa Signature

This is a more exclusive card since your annual income must be at least RM100,000. If you earn that much, this card is a good deal because there is an annual fee waiver as long as you make at least 12 swipes per year.

The rewards programs will give you 5 points per RM at participating grocery stores, shopping malls, and department stores (on the spending of up to RM1,000 per month). You also earn 5x points for all dining and hotel purchases made overseas (up to RM1,500 per month). For all other spendings, it is 1 point.

With this card your points can be redeemed for different things, ranging from travel to merchandise. Depending on what you choose, it might be possible to get a high enough value so your 5x points = 5% cashback.

3. Maybankard 2 Gold Card

This is an interesting offer because you actually get 2 credit cards; an American Express and a Visa or MasterCard. There is a lifetime fee waive and the income requirements are more reasonable at RM30,000.

The MasterCard is not very exciting, because it will only earn 1x TreatPoints for every Ringgit spent. However, the American Express will give you 5x TreatPoints. Best of all, during weekends the American Express card will also give you 5% cashback (up to RM50 per month).

4. Giant-Citibank Credit Card

If you shop a lot at Giant, this credit card offer is worth considering. The income requirement is low at RM 24,000 however the annual fee is relatively high at RM120.00. So make sure you study the cashback program closely to see whether or not it will be worth it for your spending.

• Tier 1: It your total monthly spending (at Giant + elsewhere) is under 800RM then you will only earn 2.5% on the purchases from Giant and 1% at participating restaurants and utilities.
• Tier 2: If your total monthly spending is 800RM and above, this is one of the best cashback credit cards around. It will give you a full 5% cashback at Giant stores and 2% on the restaurant and utility categories.

However, the biggest disadvantage with this program is that your maximum rebate at Giant stores is RM 400 for Tier 1 and 600 for Tier 2. Your total annual rebates are also capped at a maximum of 600.

5. OCBC Titanium Master Card

Just like the HSBC Visa Signature, this credit card is free as long as you make at least 12 purchases per year. The income requirement is RM36,000 but I have read reviews from customers which much higher incomes who for some reason, don’t get approved for it. So it sounds like this card is not the easiest to get.

This has one of the best cashback programs on the market because it’s based on categories, instead of specific merchants. You will get 5% cash back at grocery stores, restaurants, petrol stations, and utility bills. Everything else will be a flat 1% rebate.

With this generous program, it comes as no surprise that there is a limit to how much you can earn; a max of RM50 per month and 600 per year.

Conclusion?

I own and operate one of the most popular credit card websites in the United States, so I know the reward programs quite well! We do have some excellent 5% cashback card offers in the US, but nothing that compares to the above credit cards! So if you live in Malaysia, consider yourself lucky!

Should you repay your mortgage balance with the help of a credit card?

This is a guest post by Alex Brown, Marketing Head, and Editor of mortgagefit.com.

As the current economic situation is taking a toll on the US citizens, people are not getting the chance of repaying their home mortgage loan with their own funds. Most of them are looking for ways through which they can repay their loan without taking much stress on their present finances. When a homeowner is too much worried about his monthly obligations, he takes resort to his plastics in order to make life easier. However, this is not at all recommended by the financial experts it can heavily take a toll on your finances. This is the reason why it is said that a person must consider how much can I afford to pay for a house before taking out a home loan so that he doesn’t fall in danger. Though there are various credit card companies that have introduced programs that allow them to repay their home loan with their card, it is always better not to opt for this option.

Some important questions to consider before using your cards to make the mortgage payments Even though paying back your mortgage balance with your credit cards may seem to be an appealing process, you must still ask yourself some important questions.


 1. Do I have the ability to repay my balances in full? The first and the most important question is whether you have the ability or rather the financial ability to repay your debts in full every month. On high-cost items like mortgage loans, the interest rates will always accumulate and this can make repayments costlier for you. Though the interest rates that you pay for your mortgage loans are tax-deductible, yet the credit card interest rates are not. Carrying a balance from one month to another will have a dear impact later on.

 2. Will this entire process hit my credit score? Whenever you think of repaying your mortgage payments with credit cards, you must always consider the impact on your credit score. Only when your credit limit is not enough and after you add your mortgage payments to your credit card, it consumes half of your limit, which can hurt your credit score.

 3. Am I timely while paying the credit card bills? You must always make sure that you repay all debt obligations on time so that you don’t incur late fees and penalties in the long run. On credit cards, a single late payment can cost you dearly.


 Even after you get positive answers to the questions mentioned above, you must try your best to avoid repaying your mortgage with credit cards. It is always better to consider ‘how much can I afford to pay for a house’ before taking out a loan so that such a situation does not arise when you need to take the help of your credit card. You must also manage your personal finances and make payments on time.

Top Five Ways on Negotiating a Credit Card Deal

This is a guest post by Mike Brains

 There are many ways you can improve your credit card deal by negotiating with your card provider. In fact, by following these tips, you could save a lot of money.

1. You should always compare credit cards. If you see a credit card with a better APR than you currently have, tell your card provider.

Often, they will reduce your APR to keep you as a customer. If they can't do this, you should transfer to a provider that offers the best credit card rates.

2. Do not be afraid to take advantage of your loyalty as a customer. If you have held a credit card for a long time, you can use this to negotiate a reduction in the interest rates or fees. Highlight how valuable you are as a customer, and your card provider may reward you.

Again, it makes sense to compare credit cards. Knowing what other companies are offering will help you negotiate with your current provider.

3. It also helps to know how you use your card when negotiating. For example, if you always pay off the balance early, then it doesn't matter if you are getting the best credit card rates. After all, you won't be charged interest if you have no balance. Instead, you should try and persuade your provider to offer rewards such as air miles or cash back. On the other hand, if you often have a balance on your card, your negotiations should be aimed towards reducing the APR and any fees.

4 Make sure you talk to someone with authority when negotiating with your credit card company. Most customer service staff won't be able to offer the best credit card rates, so ask to speak to a supervisor.

5. Finally, try to reduce any fees. Once again, it helps to compare credit cards so you can quote the fees charged by other companies.

Nothing will get your credit card company to act like threatening to close your account and go to a rival.

New Credit Card Rules in Malaysia

Bank Negara Malaysia is tightening credit card requirements for those in the lower-income bracket to keep household debt at manageable levels.

With immediate effect, first-time applicants for a credit card must now have a minimum monthly salary of RM2,000 from RM1,500 previously.

According to Bank Negara Malaysia deputy governor, Nor Shamsiah Mohd Yunus, new and existing cardholders earning RM36,000 per annum and less, can hold only credit cards from a maximum of two issuers. The maximum credit limit has been capped or two times the monthly income of the cardholder

For existing cardholders, they need to choose their preferred two issuers by December 31. For those existing cardholders who are earning less than RM24,000 per annum, they need not surrender their credit cards.

Nor Shamsiah said cardholders would be given at least two years to service their outstanding debt for cancelled cards to comply with the new requirement

For existing cardholders, whose outstanding balance exceeds the maximum credit limit, a grace period of two years will be given to settle the amount in excess of the maximum credit limit

From January 1 onwards, issuers shall review cardholders’ eligibility on the anniversary date of the credit card. During the review, if cardholders have fulfilled their quota of holding credit cards from two issuers, the issuer shall not extend their credit card facility to the cardholder.

Quick and Easy Ways to Become a Bankrupt

Spending money can be a fun and easy thing to do but building up debt is even easier by just carrying a few credit cards. Here are the fastest ways to ruin your personal finance:


1. Don’t track your spending: Don’t care about the formula and the budget that income = expenses + savings. All you want is just to spend as you wish. without considering your limited income

2. Just pay the minimum amount for your credit cards: Credit cards give you extra spending power. Just charge and charge to your heart’s content. When you receive the money statements just pay the minimum sum or any other smaller amount depending on the fund available in your checking account. You are not bothered to make prompt payment and you let the bank charge late payment fees and interest on outstanding balances.

3. Credit card advances: You get cash advances against your cards and buy what you want or to meet your day-to-day expenses when you run out of cash.

4. Follow your neighbors: Your neighbor has just bought a new car. You are thinking that if he can afford it you can too. You go ahead and trade-in your old car which is less than three years old.

5. Skip your loan instalment payments: By now you are unable to make ends meet. You have reached your limit for all your credit cards
and you have no choice but to skip a few loan repayments.


Your spending pattern will not last long because your financial resources are limited and your debt is attracting more and more interest and it is no longer manageable. Very soon, financial institutions where you have obtained your credit cards and loans will file bankruptcy proceedings against you.

Car Loans and Bankruptcy in Malaysia

According to a report in The Star, more than 500 people, mostly aged between 35 and 44 years, were declared bankrupt every month from January to May this year because they failed to service their motor vehicle loans

Once a person is declared bankrupt he will be restricted from, among others, traveling overseas, holding the post of a company director, and will have to give up his assets, including property and cars. He must contribute to the bankruptcy estate, and will only be discharged once the sum owed is settled.

Under the hire purchase agreement, the bank repossesses the car if the borrower defaults the monthly installments for three consecutive months.

It will sell off the car to recover the sum owed and if the amount still owed is more than RM30000 the bank will file a bankruptcy petition in the High court.

In the case where the sum owed is below RM30000 the bank will wait until the amount, with accumulated interest, balloons to RM30000 before filing the petition

How do you avoid a default in car loans and bankruptcy? Read 10 Tips to Avoid a Default on a Car Loan and Bankruptcy.