A credit card is without a doubt one of the most convenient and attractive financial products for consumers. With one, you can “buy first, pay later” – it’s almost too good to be true. However, good things never come for free. That’s where interest, and other fees and charges come in.
Credit card interest is a charge by banks for letting us buy items and services without actually paying first. Interest charges is a way banks make money. Additionally, banks also have charges such as Over-Limit Fee, Late Payment Fee, Cash Advance Fee and so on.
People are often unaware or caught out by these terms. Below, we have put together some simple steps you can take to avoid paying these unnecessary fees and charges (or at least pay less of it!):
1. Pay off your outstanding balance in full
The easiest way (and you’ve definitely heard this before) is to pay off your outstanding balance in full every month. No outstanding balance, no interest charges.
2. Take advantage of balance transfer programmes
Taking up a 0% balance transfer plan is one of the ways to avoid paying a lot of interest. However, these plans usually only last for a short period.
If you have a large outstanding balance, make sure you take advantage of these balance transfer plans offered by banks!
3. Know when your interest free period ends
Most credit cards come with a grace period (usually around 20 days) where purchases made during this time do not attract interest charges from the bank.
Take advantage of this period and pay off your balances before the interest-free period is up.
4. Minimise the usage of cash advance
Having cash that don’t belong to you is always tempting, but there is no way you are getting cash without giving up something (more) in return.
Banks normally charge an extremely high interest rate and fees on any cash advance, so try and minimise this.
5. Pay your bills on time
Late Payment Fees are really unnecessary. Pay on time, every time, and save yourself a couple of hundred ringgit a year!
6. Avoid exceeding your credit limit
Once you exceed your credit limit, banks automatically charge you an Over-Limit fee. By putting a little effort into monitoring your spending, you can avoid paying these unnecessary fees!
As you can see, there are many ways a bank can charge you for using their cards. Many of these fees and charges are unnecessary and avoidable, so be a smart consumer and avoid paying these fees from now on. You would be surprised at how much you can save!
