Do you need a credit card?

July 1st, 2007 at 8:00 am by azwan. Filed under Managing Money.

Visa and Master Card Credit Card When I did a post on Paypal Credit Card verification, I received a few emails asking me whether they should get a debit card or a credit card.

Do you need a credit card? It’s still up to you. If you can behave well with money, then why not? If money is working for you, then why not? If you are working for money, don’t!

Although it was reported earlier this year that the total credit card debts in Malaysia has reached RM19.8 billion at the end of 2006, I still feel that credit card plus an online banking account can help in managing money. Better if you can get one from the same bank that you have an online account. Getting one is easy, you need to be > 18 years old and make at least RM1500 per month.

Some of the benefits are :

(1) You don’t need to carry a lot of cash. Especially if you travel frequently. Even if you are not traveling, imagine carrying RM9000 in cash to purchase a 42″ Plasma HDTV. How many shopping centers accept personal check? None!

(2) For emergency. When you are running out of cash but your car need a major repair. Or you need money for your medical expenses. Most private hospitals require credit card for registration.

(3) No joining or annual fees. Most of them are currently free for life or at least free if you maintain a certain amount of spending each month. If you use it well, you are actually not paying anything to own one.

(4) Interest free loan. You actually get up to 25 days interest free loan. You can use the money on hand for other purposes first, like putting it in the stock market or something. Explaining this will be very long, so please don’t ask.

(5) Interest free payment on purchases. Some banks offers up to 24 months of interest free installment on your purchases without any management fee. Why buy in cash when you can pay installment? Like paying for your car insurance, if you can pay monthly why pay annually? The total amount and protection are the same regardless how you pay.

I think 5 is enough at the moment. If you can’t manage money, then forget credit card. Interest rates alone can kill you if you can only afford to pay the minimum monthly payment. You are only in control if you are able to pay off the full balance at the end of each month or at least within 6 months time. More than that, you need to get help. Some people may have 2 or 3 credit cards. This is dangerous.

There are a lot of sites that offer a one stop center for you to compare credit card offer and apply directly. One even has a credit card blog; where it discuss, mostly, the benefits of having one.

The decision is yours. Don’t like credit card? Get a debit card instead.

Hmmm.. you might ask, ‘You touch on managing money but never explain how. WFT!”. How do you manage money actually?

Simple. Don’t spend more than what you make. More of this in the future.

Tags: credit card, master card, visa, debit card

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22 Responses to “Do you need a credit card?”

Kevins On July 2nd, 2007 at 9:22 am

Credit cards can be a good thing but its very important that consumers are aware of all the rates and charges that go along with them. Many credit cards have rates that can change and lots of fees that can really ad up. Even many smart consumers can have trouble with credit cards if they aren’t careful - the credit card companies just make too much money off of these fees and such. Merchants Payments Coalition who I do some work with is trying to increase everyone’s awareness of interchange fees which not only cost consumers as a hidden fee, but also hurts small businesses too. Gas stations are an example of where interchange fees are costing a small business a lot because of the popularity of credit card purchase - small purchases that have another chuck of profit taken out of them by the fees credit cards companies take out for using their cards really takes a toll on small businesses and it costs most consumers at least $300 a year too. So, while credit card companies can have benefits, please be sure to read into all the terms and conditions that go along with them.

[Reply]
azwan reply on July 2nd, 2007 8:12 pm:
If people are using it to manage money then I think it is ok but if it is because of the credit limit they are after then : trouble. It will be worse if they are only paying the minimum monthly payment.

The rule is still very simple, with or without a credit card, don’t spend more than what you make.

[Reply]
kucau On July 2nd, 2007 at 12:58 pm

dey azwan , is this a paid review?

[Reply]
azwan reply on July 2nd, 2007 8:16 pm:
Partly yes.

[Reply]
Syafrizal On July 2nd, 2007 at 1:01 pm

Well for me, if I do want to use a credit card, I choose debit card. If not I will be on those statistics hehe if you know what I mean. I want to control what I want to do with my money. Not the other way around. I’ve got a lot of friends who really have a lot of debt due to credit card usage. And I said to him that, just use debit card. In that way, he can minimize the usage and control his money.

[Reply]
azwan reply on July 2nd, 2007 8:16 pm:
Debit card is just like cash. No cash = no money to spend = no problem. I travel a lot lately, although only in Malaysia. I prefer credit card over debit card due to the top up part. Troublesome.

[Reply]
shutterspeaks On July 2nd, 2007 at 11:45 pm

i want to comment earlier but i cannot read thoroughly that time as i was rushing to watch Transformers for 2nd time

I believe u meant RM18,000.00 per year = RM1,500 per month. If RM1.5K per year can apply credit card, sure more people declared bankrupt as more people look at credit card as loan facility rather than utility or tool.

If anyone want to apply for credit card, go for without annual fee, i read an article that it is stupid to pay for credit card annual fee, i since then terminated all others and maintain only few. I actively use my pb visa and mc cc which give me cash back return, in cash. I posted in my blog last year ‘earning’ from using my cc.

[Reply]
azwan reply on July 3rd, 2007 12:15 pm:
It’s per month, my mistake. I have updated. Thanks. Transformers twice .. fuyoh! .. I going for the 2nd time this Saturday.

[Reply]
shutterspeaks On July 2nd, 2007 at 11:47 pm

one more thing, pay in full. if u cannot pay in full, don’t make the purchase in the first place. and pay in time, RM5.00 is a lot. Better belanja me roti bom manis + teh tarik miahahaha…

[Reply]
zaki On July 3rd, 2007 at 3:06 am

Simple rule that i use now.

1. Use credit card intelligently. Pay immediately by transferring money online to the credit card after swiping it. So, the credit card and the saving/current account is the same. Use public bank or maybank. others, i;m not sure…

2. Take only free for life credit card.

3. Discipline.

[Reply]
Kevins On July 3rd, 2007 at 8:24 am

“3. Discipline”

Its hard for a lot of people to have discipline when many credit card companies have rates that can change with very little if any notice to the consumers. Additionally, even if you pay off your card in full it doesn’t mean you won’t get charge interests on purchases you make. Many credit card companies don’t credit your payments until after they can charge you for something. My problem is that no matter how intelligently you use your credit card - there are still many predatory practices out there and a lot of hidden fees like interchange the cards get away with without any accountability.

[Reply]
kaSyah On July 3rd, 2007 at 8:41 am

hrmm… i only have debit card .. credit card,as a student im not qualified to have one

[Reply]
azwan On July 3rd, 2007 at 1:01 pm

@Kasyah, when you are not a student already, re-visit this post/comments, read it and think again whether you should get one or not. If you can’t manage cash, please ignore credit card and stick to your debit card

@Kevins, when it comes to money, there’s always the temptation to spend even when they are not yours. I was in deep shit before due to credit card but i realized it at the early stage and managed to get out of the problem. Talk about young and reckless

And it also depends on the bank but it’s always hard to find one that meets all your requirements as they too want to make money, right?

@Zaki, if you want to pay immediately, might as well get a debit card.

@ShutterSpeaks, you are right. Even RM5 is a lot to me. I was charge once before for just being 1 day late. I canceled it and now using the one that i can link with my bank account.

[Reply]
zaki reply on July 3rd, 2007 6:02 pm:
When we use cc, we can get/collect points and redeem exciting prize!!! That’s one of the reason we use credit card…ain’t it?

[Reply]
azwan reply on July 3rd, 2007 11:57 pm:
One of the reason is ok but should not be the only reason, then you would be spending more than what you can afford just to earn points. Some banks that offers free for life have points aging. After a certain period (i year usually) your points are forfeited if not used

[Reply]
Fahmishah On July 3rd, 2007 at 4:55 pm

hahah..i refer to use debit card because i dont like to ‘bayar hutang’ huhu..but sometimes credit card save our time..

[Reply]
abdfatah On July 3rd, 2007 at 5:55 pm

debit card is very good then credit. how can you pay more then one credit card? how many people got a title of bankrupsi? is it right what i write here? my english not good yet in writing… sorry for myself…

[Reply]
azwan reply on July 4th, 2007 12:03 am:
Fatah, nice try bro. Kalau rasa tergeliat tangan menaip dalam English kau bedal aje dalam BM. Post will be in English but it’s ok for comments. You can do it in Malay. But don’t speak to me in French, Spanish, Mandarin or any other language.

[Reply]
CreditPreceptor On July 3rd, 2007 at 6:49 pm

I enjoy using credit cards for purchases and travelling because of convenience. Also I am an active traveler therefore credit cards for frequent fliers are right for me because I can earn bonus miles and save my money. I have already forgotten how it is to carry cash because I do it very seldom.

[Reply]
azwan reply on July 4th, 2007 8:42 am:
I usually have less than RM300 (about USD90) in my pocket as i dont like to carry a lot of cash but I don’t really look at the points. It’s a bonus but not an important factor for me.

[Reply]
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