Have you been thinking of signing up for a credit card? To find out if you're ready, here are five questions you should ask yourself.
A credit card to some is a convenient way to pay and afford things you wouldn't usually be able to. But to some others; it's an evil tool of oppression used by banks to keep us in a hock for life. The truth is; it can be any one of these things but the real decider is the user. Will you use your credit card to your benefit or your ruination? It's really up to you.
If you have to decided to give this little plastic friend a go; we recommend asking yourself these questions.
1. What are my reasons for wanting a card?
Before applying for one, it's important to realise the purpose of having a credit card. For the most part, the most obvious reason is to afford you ease of payment and an added credit line if you need it. Additionally, you could choose to get one based on it's perks and rewards. But what do you want your credit card for? If it's just to buy a new RM3,000 handbag or Playstation; you may want to reconsider. If your reasons are solely for enjoyment and leisure; it won't be long before you run up a bill you can't repay.
2. Do I qualify for a card?
Wanting a card is one thing but being able to get one is another. Bank Negara issued guidelines in 2011 limiting the number of credit cards you can hold at a salary of RM36,000 per annum. However, banks have also increased the minimum salary requirement per year to RM24,000 even for baseline cards. This is the bare minimum and many times; you may not qualify if your overall credit rating is bad or if you've been a bad paymaster.
Making a list of your monthly expenses give you an idea on how much can you afford each month. If you have other loans payments to make each month such as mortgage loan, PTPTN loan, or car loan, you need to make sure that you can afford to pay off a credit card bill. Because even if you don't calculate this; the banks will before they approve your card and credit limit.
3. What kind of card do I need for my lifestyle?
Credit cards come in so many variants these days. But knowing your lifestyle and spending habits will help you choose the best one for you to reap maximum rewards. Reward cards are fun for those who enjoy collecting points and scoring attractive gifts or rebates, travel miles and shopping vouchers. If you're the cash loving kind (but really, who isn't?) you might prefer a true-blue cashback card.
If you only use credit card for emergencies, you should probably consider the card with 'evergreen' points and one that is free for life. The cards requiring swipes to waive annual fees may not be the best idea.
You've decided on the objective of having a credit card at question one so now it's time to do research based on this need. Or you could just check out our card comparator where we did the work for you (and score cool freebies while you're at it).
4. Should I get another credit card?
Thinking of getting a second credit card? If you plan to have one for emergencies and the other for daily use, you're definitely in the majority. However, can you resist overspending with the availability of two credit cards? If you are ready; make sure they are both without annual fees as you don't want to increase the cost of having two cards.
Getting two cards also mean that you need to be extra careful in choosing. You want the two best able to complement each other and give you a full round of benefits.
5. What are other charges that I should be aware of?
The amount you spend isn't the only thing you will be seeing on your total bill. There are many other fees involved such as interest fees; late fees and annual fees. You can opt for a card with zero annual fee but there will still be interest charges and other fees. These charges can add up over the years so do try to hold off using your cards unnecessary or carrying a revolving balance.
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