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6 Things About Credit Cards That You May Not Realize


1. When you first get your credit card and you may be tempted to swipe it to the max and pay the minimum sum. In a year, you pay $5000 x 24% which is $1200 each year as fees to the bank.

2. You can get waiver for annual fees, late payment, interest. Only if you call in to beg/ demand. And your record is relatively spotless, you pay everything in full and don't forget to pay your credit card bills too often. Else don't bother calling.

3. If you are sinking under number 1, you can do worse if you have 5 cards with 5 different banks and pay $1200 x 5 = $6000 each year to the banks. You'd be the banks' favourite customer.

4. If you think no.3 is bad, it gets worse. You can apply for the credit lines, or their balance transfer promotions since these pay less interest to the bank. Oh, only 12% per annum! And you continue to spend like there's no tomorrow and apply for 5 credit lines with your 5 banks. 5000 x 12% x 5 banks = $3000. So it is $3000 on top of the $6000.

5. When you are in stage no.4, the banks introduce you to overlimit fines, late fees which they will not give you a waiver, annual fees that they also won't give a waiver. And interest? They'll want all the interest too. And when you try to swipe the darned cards, they all get rejected because you have reached the limit. You can the bank to plead to allow the purchase and you are introduced to the Authoriser who decides if your DVDs, BOSE system, furniture, lingerie, restaurant bills can be charged.

6. When you withdraw money, the bank start charging 24% not just on the amount withdrawn but on the ENTIRE credit balance outstanding at the time. So if you have swiped $4500 on a holiday overseas and find that you didn't have enough cash, you withdraw $500 from the credit card. Big mistake. The bank charges $5000 x 24% the moment you withdraw the cash. $3.28 a day, $100 a month of interest.

So use your cards wisely, pay in full and get all the credit card rewards.

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John YS said...
October 28, 2010 at 11:40 PM  

You give a very bad impression of credit cards.

Point number 6 is also incorrect. The bank calculates interest in a very 'special' way. By the way, you can call and demand for an explanation how interest is calculated.

You will be amazed.

Here are some benefits of using credit cards.

1. Promotions at restaurants. 1 for 1 during lunch, 50% off the next item, etc. Sometimes even get exclusive stuff.

2. Reward points. Use them wisely, change for discount coupons.

3. Have it on GIRO, have your bank savings/current account to pay your credit cards bill in full. Punish the bank, don't let them earn interest.

4. Other funny stuff. Call banks during your birthday, New Year, Chinese New Year, to ask for gifts. You'll be surprised.

la papillion said...
November 2, 2010 at 10:07 AM  

Wow...can we really ask for gifts? What sorts? haha

John YS said...
November 3, 2010 at 8:58 PM  

a bottle of (cheap) red wine, birthday cards, shopping vouchers (expiring soon), and some other stuff.

dun expect them to give you cash or a brand new tv, unless maybe you have millions park in the bank.

Unknown said...
November 7, 2010 at 1:18 PM  

I believe that credit card is useful only if you have financial discipline. There are always the good and bad sides of everything. Just buy within your limits.


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