Credit Cards remove 20-day interest free - starting July 2008

Credit cardholders, it pays to pay up in full

I have just received a forwarded email saying that all Credit card companies are going to scrap the 20-day interest free period for those who do not pay up their bills in full. With effective from July 2008, credit cardholders who do not pay up in full and on-time may end up paying more.

Under current arrangements, credit cardholders enjoy a 20-day interest-free period on their new retail transactions. However, after July, only those who make full payments before the due date will be entitled to the interest-free days. Those who make only partial or minimum payment will be charged interest on the day the new purchases are posted to the card's accounts. In addition, the late payment charge is now a minimum of RM10, or 1% on total outstanding balances; previously it was 1% of the minimum payment amount.

Cardholders who cannot be prompt in their minimum payments because they do not have the money are now going to get into bigger debts!

Those who use their credit card for convenience or to earn points should now pay close attention to the outstanding amount. If you continue to pay in full diligently, you will not be affected. Those who intend to pay the bill in full, buy pay in round numbers or pay the wrong amount will be severely impacted if he makes a big purchase on his card, as he will be charged interest on this purchase from the date of transaction.

So, use your credit card wisely. Use cash for any retail transaction if possible to avoid getting into bigger debts due to the interest compounding effect.

Cancel any unused credit cards, maintain only one for emergency use.