(129) Credit Card - Helping you or killing you?

最近开始忙了，也懒得汉语拼音。就来秀秀我的半桶水的英格厉势吧。

I came acrossed a lot of articles in different forum. Mostly talking negatively about credit card.
To me, I totally disagreed.

No doubt the flexibility provided by CC has very strong influences to encourage one to spend more, especially a lot of promotion with zero interest installment plan. Obviously, this is a trap for those who are poor in their financial control & planning. If you are one of them, the best way is not to hold any CC. Cash is your solution.

To me, CC is a very good financial tools. Some cards provide Cash Rebate, some can collect points to exchange free gift.

More importantly, the 30 days + 20 days, a total of 50 days free interest financial leveraging!

If you have been suffering from house loan interest, car loan interest, you should already learned from this experience to manage how to leverage the 50 days free interest from CC. If you don, pity you...

Of course, there is no way to enjoy full 50 days free interest. Because it's not possible that you can plan your monthly budget and spend all in 1st day of each monthly billing cycle. So, just take an average of 25 days will do. This is enuf to show you how powerfull is this 25 days effect, thru the power of compaunding!

Thanks to the competition among banking industry. The recent flexi-loan home loan product has help us a lot (if you still not enjoying this, soli...).

The basic of this product is, put your excess $$$ in current/saving account that link to your house loan acc, and it will auto off-set for balance outstanding interest calculation.

So, what does it related to Credit Card?

My monthly fixed spending (insur, Digi, TNB, etc) is about 2500. Variable spending is another 2500. Total is around 5K per month. I love to use CC wherever possible, even for a very small amount.

Take an average of 25 days free interest period (normally I only issue cheque to pay on last 3 days, fully utilise).

That 25 days is actually a REAL saving to me, benefit thru my housing loan! WHY?

CC give me 25 days, means that 5K still remain in my current/saving acc for 25 days. What can this brings to you?

My current house rate is BLR-1.55%, net at 4.45%.

RM5000 x 4.45% / 365 x 25 days = RM15.23

Means by using CC, every month it helps me to save RM15.23 or RM183 a year indirectly!

Sounds small amount? How about over 30 yrs repayment period? That is RM5490 saving!

Don forget, the BLR just start to drop recently. If based on previous rate, I actually save more.

Apart from this, I also getting cash rebate about RM37.50/month, or RM540 a yr. And the beauty of it is, I am leveraging bank's resources for those items that is a "MUST" spending for daily life, not for something that I "desired" for.