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Using a credit card is a payment method that allows you to purchase items and services without having to use cash. When you use your credit card, your credit card issuer will pay the merchant on your behalf and bill you later in the form of a monthly statement.
 
 
     
   
  When you receive your credit card, a document consisting of the full T&C will also be provided to you by the credit card issuer. Generally, the T&C comprises:  
     
 
The types of charges imposed
Rights and responsibilities of the card holder and the credit card issuer
Usage of the credit card
Terms of repayment and liability for unauthorised transactions
Procedures for lodging complaints, investigation and resolution
Secrecy of information
 
     
  Once you've started using your credit card or signed the acknowledgement of receipt, it is usually deemed that you have accepted the T&C of the credit card. Therefore, it is important for you to read and carefully understand the T&C before using your credit card and signing the agreement.  
     
     
  There are various types of charges that you must understand which include:  
     
 
Joining fee
 
Some credit card issuers impose a one-time joining fee for credit cards and the fee varies depending on each issuer.
 
Annual fee
 
This is a flat fee which you pay annually once you've accepted the credit card. Bear in mind that this fee is still applicable regardless if you use your card or not. Fees may range from RM60 to RM90 for a classic card and RM130 to RM195 for a gold card.
 
Finance charges (Interest charges)
 
These are charges imposed on you on the outstanding balance which you have not paid your card issuer after the payment due date. These charges are usually calculated on a daily basis. With effect from 1 July 2008, interest charges will be on a tiered basis based on the repayment record of cardholders. The intention is to encourage and instill good financial discipline amongst cardholders. With effect from 31 March 2009, the tiered charges are as follows:
 
Repayment Track Record Interest Charges
     
  Cardholders who promptly settle their minimum payment due for 12 consecutive months  
     
     
  Up to 13.5% per annum  
     
     
  Cardholders who promptly settle their minimum payment due for 10 months or more in a 12-month cycle  
     
     
  Up to 16% per annum  
     
     
  Others  
     
     
  Up to 17.5% per annum  
     
 
Seek advice from your credit card issuer on methods of calculating the charges so that you could avoid unnecessary interest charges.
 
 
Cash advance fee
 
This is a fee charged for each cash advance transaction and it ranges from 3% to 5% of the total cash advanced. Bear in mind that this fee is in addition to the finance charges imposed on the amount of advance given to you. The finance charge is calculated from the transaction date or when the amount is posted to your credit card account. Refer to your credit card issuer on your limit, if any, on the amount of cash advance allowed.
 
Late payment charge
 
This is a charge imposed when you fail to pay the minimum monthly payment by the due date. If you pay after the due date, you will be charged both the finance charges (the interest on your outstanding balance) and the late payment charges. Late payment charges can be as high as 1% of the outstanding balance, subject to a maximum amount of RM75 while the minimum amount is RM5.

Details on all fees and charges for your credit card is available on your banking institution’s website.
 
Interest free period
 
You will enjoy an interest free period, usually 20 days from the posting date of the transactions (only for purchases) if you do not have any unpaid repayments due from the previous month. Therefore, if you make partial or minimum payment of the amount due, you will be charged an interest charge for all purchases paid through your card from the day the transactions are posted to your card.
 
   
   
   
 
     
     
   
  With so many credit cards being offered, it is important to get a credit card which best suits your needs. Shop around and compare the different rates, fees and charges and features each credit card issuer has to offer before making your decision.  
     
 
Promotional gifts
 
Gifts such as handphones, leather wallets, etc are some common offers from credit card issuers in order to promote their cards. However, terms and conditions do apply for these offers so do pay attention to them before signing up.
 
   
Teaser rates
 
Some credit card packages may offer lower fees and finance charges for a temporary period or even waive them for the first year or so. However, remember to read the fine print in these offers and understand them before you make a decision. Also be aware of when the promotion period expires as you may be charged the regular or higher fees after the promotion ends.
 
   
Finance charges and fees
 
Different card issuer may impose different fee for cash advance, generally between 3% to 5% of the amount advanced and interest charges (maximum 18% on cash advance). Also card issuers may offer attractive rates under the balance transfer schemes to get you to sign up with them. Always consider applying for credit cards which have lower fees and make sure you understand the terms imposed under the balance transfer scheme before you sign up for it.
 
 
   
   
  You should be aware of the consequences of paying the minimum payment each month. This will incur more interest charges and will take you longer to settle your outstanding balance, resulting in huge debts. However, if you pay your debt in full, you will also enjoy an interest free period of about 20 days for all your purchases.

Below is an illustration of the repayment period and total interest charged (finance charges) if you pay only the minimum monthly payment each month, i.e. 5% of the outstanding balance.
 
     
  Outstanding Amounts  
 
  RM 500 RM 1000 RM 5000 RM 10,000
Interest rate (p.a)
17% 18%
17% 18%
17% 18%
17% 18%
         
   nbsp;   Years
4.1 4.2
5.7 5.8
9.3 9.6
10.9 11.2
      Interest amount
156 168
354 382
1941 2097
3921 4240
         
 
     
  For example, if your outstanding balance is RM1000, it will take you approximately 5 years and 8 months to settle your total debt and it would cost you RM382 in interest charges based on an interest rate of 18% per annum.  
     
     
     
     
   
 
Credit card fraud is a serious crime which can cost you and credit card issuers huge losses. Credit card issuers have taken security measures to protect you against such possible frauds.

However, you can also take the proper safety measures to avoid from being a victim of fraud.
 
 
     
  Here’s what you can do to minimise your risk of being a victim of card fraud:  
     
 
Safeguard your credit card
 
-   Sign on your credit card immediately after you received it
     
-   Keep your credit card in the same place in your wallet or purse so that you will notice it immediately if it is lost or stolen
     
-   Do not lend your credit card to anyone
     
-   Do not provide your credit card details to an unknown party
     
-   Do not write down your PIN number on the back of your credit card or keep it in your wallet. Always memorise you PIN number instead.
     
-   Keep the telephone number of your credit card issuer so that you can immediately report lost or stolen cards, unauthorised transactions or disclosure of PIN to a third party
     
-   Cut your expired credit cards into two when you get a new one
 
Check your credit card transactions to avoid unauthorised transactions
 
-   Check all details on the charge slip before signing or confirming the transaction
     
-   Keep all your charge slips and check it against your credit card statement as soon as you receive it
     
-   Notify your credit card issuer immediately of any error or possible unauthorised transactions and follow up in writing as soon as possible
     
-   Destroy all your charge slips before throwing them away
 
     
     
     
  A credit card can be a convenient method of payment when you do not have cash but using it too much may incur plenty of charges. Here are some tips on how to leave your credit card charges to a minimum:  
     
 
Shop around for the best deal. Look out for waivers on annual and joining fees for the first year.
   
Make cash advances with your credit card as a last resort as the finance charges and fees can be very expensive.
   
Make your payment before your statement's due date to avoid paying finance and late payment charges.
   
Try to settle your outstanding balance in full to avoid finance charges and be aware of the consequences of paying the minimum amount all the time.
   
Limit the number of credit cards based on your needs and payment capability
   
Be alert of changes to the policies and rates.