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There are so many credit card choices you can find in Malaysia, each and every one offering really good benefits to cardholders. Credit cards do have their usefulness as you can pay for things upfront first if you have no available money on you. Though credit cards do have many uses, it does not always mean that it’s always beneficial. If you are a young person looking to apply for credit cards, there are certain things you should know or ask yourself first.
Basically, a credit card is where you are borrowing money from the bank first to spend on your own personal expenses. Credit cards usually come with credit limits, which often are set by the bank. Depending on different factors, some people may get a higher credit limit to spend whereas some others, less so.
Every month you will get a statement detailing the amount you have spent on. That amount is the very same amount you’ll need to pay back. If you pay late, you will incur bank charges. If you overspend your credit limit, you will also incur bank charges.
If you are considering getting a credit card for yourself, here are some things you should consider first.
1. Credit limits
A higher credit limit does not mean it’s better. It may seem like that at a cursory glance, but don’t forget that you are essentially borrowing money from the bank to use first. At the end of the day, you will still need to pay that money back – whatever you have spent, that is.
Remember that if you did not pay up, you will incur bank charges. These bank charges often cannot be waived off, even if it is on a goodwill basis. What happens when these charges keep adding up and snowballing? It can add up to a lot of money that you cannot pay. Eventually, you will be put on credit management to help you pay off that bank debt on a monthly basis. Don’t forget that even with debt repayment you may still incur bank charges if you pay late. So think again if you are not a financially smart person. You don’t want to get into debt, do you?
2. Your spending habits
If you are not a big spender and a big earner, then why should you consider getting a credit card in the first place? Credit cards often mean that you may need to make a big payment in advance first but you don’t have that kind of amount in your own personal accounts. Later on, you may apply for a credit card instalment for the huge amount spent. However, many merchants allow you to take out an instalment without needing a credit card payment first. Feel free to always ask the merchants first before making any commitments.
3. Credit cards are a commitment
Like it or not, credit cards are a commitment in itself. With monthly credit card bills, you can see that you will need to make payments on time. If you missed any payment, you’re in for a financial shock. Some people aren’t able to accept that but unfortunately, they are spending money that doesn’t belong to them.
Are you ready to commit to maintaining a credit card long-term? If you are not ready for that sort of commitment, then it’s best to put off having a credit card first.
4. Having multiple credit cards
Some people love the idea of having multiple credit cards from either one bank or multiple banks. Truth be told, having multiple credit cards does not mean you get to spend a lot. Don’t forget that if you spend more than you earn, then you will find yourself paying off multiple bills that you may not be able to pay off.
If you think you can maintain credit cards, perhaps consider maintaining one or two? If you have 0 faith in yourself, then best not to keep any credit cards at all.
Bottom Line
If you aren’t a financially smart person, then perhaps not having a credit card is a good thing. Only get yourself a credit card if you really need one and can maintain it long-term.
Lydia is a content writer under Headliner by Newswav, a programme where content creators get to tell their unique stories through articles and at the same time monetize their content within the Newswav app.
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