No More Interest-Free Period for Credit Cards

Hear ye! Hear ye!
The financial institutions in Malaysia may soon announce a drastic change in the terms and conditions for the usage of credit cards issued in Malaysia.

What sort of changes? For the better or worse? Now, everybody can apply? (similar tone to a local airline)

As everyone knows, upon purchasing a particular item or service, say RM1,000, the vendor or retail shop will swap your credit card and the issuing bank would be informed of the usage and the details would be listed in your credit card statement.

For example, you bought your stuff on 7 May 2008 and normally, your issuing bank would despatch the credit card statement by the 18th day of each month which would have listed the purchase done on 7 May 2008. Such credit card statement would normally have to be settled by month end (30th or 31st) thus allowing the credit card user a 23 days interest-free for the amount of RM1,000 being charged to the credit card.

Lots of people don't pay the full amount owing to the bank as stated in the credit card statement. Most will opt for partial or minimum payment and thus, rendering additional interest being charged on the amount remaining.

In the drastic act to be implemented, maybe second half of the year 2008, credit card users who don't pay the full amount as stated in the credit card statement may be in for a big surprise, one that will hurt their pockets even more.

When a credit card user doesn't pay the full amount as listed, issuing banks will not grant any interest-free period any more to that fella.

Say, if you have charged RM500 on 10 May, this could be listed in the system on the following day, 11 May. This RM500 would be charged interest (bank's applicable rates) from 11 May till the full payment of it. And if you still chose to make partial payment at month end, additional interest would be charged on top of interest ........................ wow!!!!

With the minimum qualification set so low as condition in applying for the credit card, the mass, if not informed of this piece of news would be hard hit.

I do take advantage of the interest-free period and normally will start charging it to the credit card right after the cut-off date and the payment for it won't be due till end of the following month.

The above is applicable in Malaysia and I'm not surprised if this is going to be practised worldwide. Be a smart consumer ..........
Tags: Interest Free Period, Credit Card, Malaysia, Issuing Bank, Financial Institutions, Credit Card User