Slice that Credit Card interest in a proper way
One Timer February 13th, 2007Having a debt with credit card isn’t the nicest thing and most of us including myself knew about this. It’s the most common thing amongst young adult city folks. Tenaciously, we don’t really think of this predicament when we were happily sliding our cards at KLCC, do we?
Alas, like everyone else, I had overspent my credit card during my wedding preparation. However, I do think that the credit money was well spent; after all our own wedding is being organized once in a lifetime.
But if you are already tied up with such credit just like me and thinking of a way out, I might have suggestion how just to do it. It may not be a straight forward ultimate solution, well nothing does, but it is a good point to know.
In this article, I will describe how I pay back my credit card with less monthly interest levied.
Usually credit card interest will be charged at 18% annually which converting to 1.5% monthly. That means if you owed the credit card RM4500, you need to pay extra RM67.50 by end of the monthly sequence.
Recently, I had found out that you can lower your interest by converting the credit to different financial channel. I’m not referring to balance transfer offered by some other credit institution. It’s actually getting a personal loan.
Getting the right channel – Reducing Balance Loans
Personal loan I’m referring is not the normal fixed rate ones. These days, as financial institutes are getting aggressive among themselves to get more customers, you will notice that they change their policies quite frequent too.
It has come to an extent that the banks have already created a plan called Reducing Balance personal loan. It’s rather different compare to the conventional loans. Previously I used to see fixed personal loans can take up to 18% of interest yearly and that does not quite make any sense in improving our credit dilemma.
Reducing Balance personal loans are in fact loans that calculated the interest during the month-end based on the balance left in your loan. Unlike fixed loan, the interest is not fixed through out the tenure. So let say if you got extra cash that month, you can always pay more than the minimum amount. By doing this, you’d not only gained benefit from the lowered interest but also the tenure has been shortened. This really helps your voyage finishing the credit amount you are owning.
How low is low?
Reducing Balance Loans that are available in the market now range at average of 10-11% annually. That translates to 1% to 1.1% each month, meaning you have saved up to 0.5% every month. It may sound not much but if really put into all account, you would eventually saved quite a lot.
There are two banks that I know give such loans. One is RHB Bank and another one is Standard Chartered Bank. RHB Bank charged its customer 1% monthly while Standard Chartered is at 1.1%. I find that Standard Chartered is very fast at giving the loan by which as fast as 24 hours approval. On the other hand, RHB may takes up to few weeks to approve.
RHB does have a website for their product. You can check out the comparison table here. As for Standard Chartered, you need to call them and ask about a product called PFi Loan.
All the best!
I learned it.
