According to the Malaysian Department of Statistics, only 1.8 in 10 Malaysians aged between 20 and 74 is a user of credit cards.
One of the possible reasons for this could be a lack of awareness on how to responsibly make full use of credit cards. There could also be a negative misconception that associates credit cards with debt and bankruptcy.
The fact is, credit card debts isn’t even one of the top four causes of bankruptcy in Malaysia. In case you’re wondering, the top reasons for bankruptcy are: vehicle loans (27.94%), house mortgages (21.36%), personal loans (20.41%) and business loans (11.71%), The Sun reported.
If you’re not already one of the 18% of Malaysians enjoying the benefits of using credit cards, here are five reasons why you should seriously consider applying for one.
#1 – Added security over your money
When you pay using a credit card, the issuing bank will pay for the transaction on your behalf until the bill for your credit card is due, when you’ll be charged for the amount you spent in the previous period.
In the case of debit cards, however, money from your savings account is debited immediately for every transaction made.
In the event your debit card details are compromised, your money would already have been directly withdrawn from your personal account. For credit cards, you simply report the incident to your bank and you will not be liable when the bill comes.
In this way, credit cards are superior compared to debit cards for safety and security.
Read Also: Credit Card Or Debit Card: Which Is Better?
#2 Access to interest-free loans
For most Malaysians, the immediate thought whenever credit cards are brought up is the fear of getting rolled over by a snowball of accumulated interests charges. However, its important to remember that interest on credit cards are only charged on the amount outstanding after the payment due date.
If you consistently settle their credit balance monthly, you do not need to worry about interest payments at all. Through careful budgeting, the interest charges can be avoided and cardholders can have access to interest-free loans throughout the month.
#3 Building your credit history
Important decisions in life usually involves a large amount of money, such as purchasing your first house, buying your first car, or securing funding for your business.
When you apply for a bank loan to facilitate these big-ticket items, banks will often look into your CCRIS/CTOS credit ratings to assess your level of creditworthiness, which is the ability for you to pay back the loan. These ratings are derived through your credit history and how disciplined you are in repaying your credit card bills.
If you never used a credit card or engaged in credit transactions before, you will not have any credit history. This means that when you do apply for a loan, it will be hard for the bank to determine your creditworthiness.
By using your credit card to pay for your monthly expenses and then being disciplined in paying off the outstanding credit card charges in full, you will be able to establish an excellent credit rating track record while not spending a cent more than usual.
Read Also: What Can Banks Do If You Don’t Pay Up?
#4 Being smart during emergencies
You might have experienced a situation where you had to pay for an unexpected expense, but may not have enough cash on hand to pay for it.
One example could be a loved one being hospitalised or you car is damaged and requires repairs. It might take some time before the insurance company reimburses you. For obvious reasons, borrowing money from your friends or relatives to tide through this period isn’t exactly ideal.
Instead of than having to go to trouble your loved ones, you can use credit cards to cover those emergencies expenses. You just need to make the necessary adjustments in your budget to cover those extra expenses.
#5 Benefits and rewards
Lastly, perhaps the most exciting part about using a credit cards is its ability to earn rewards and benefits.
Banks do their best to differentiate their credit cards by offering consumers different privileges and benefits. That’s why it is not uncommon to meet someone who owns ten different credit cards for their unique benefits and rewards.
Some credit cards offer cashback on petrol payments, others provide exclusive entry to premium airport lounges, and some let you earn air miles points for every RM you spend.
There are plenty of opportunities out there and it’s up to you to find a combination of cards that work best based your spending patterns and eligibility.
Are credit cards for you?
With the above benefits of credit cards, there really isn’t much downsides to getting and using a credit card, so long as you are disciplined in spending within your means and diligently paying your credit card bills.
As you plan well and practise good money management habits, you can enjoy the great benefits that credit cards have to offer with a peace of mind.
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