Things To Consider When Choosing A Credit Card
Generally speaking, credit card customers now have the luxury of choosing a credit card out of the many different types of credit cards available in the market. Financial institutions are becoming more aggresive in their approach to capture the credit card market and this is largely attributed to the high earnings for these financial institutions through commissions paid by merchants and high interest rates charged to credit card holders when the full outstanding sum is not paid by date due. It is therefore not surprising that these financial institutions even issue different types of credit cards to attract different segments of the market. So, how should one go about choosing the best credit card to apply for? What are the things you should consider when choosing a credit card?
Annual Fees
First and foremost, find out whether any annual fees are payable. Some credit card issuers waive annual fees totally with no terms attached (one of which is Direct Access under CIMB Bank). Some waive the annual fee for the 1st or first couple of years. Some would waive the annual fee subject to your amount charged per month or year. Some would waive the annual fee subject to the usage of the card for a stipulated number of times. In my opinion, annual fees are archaic and should be done away with - especially with such stiff competition between the financial institutions. Anyway, even if your credit card comes with an annual fee, it does not prevent you from requesting for a waiver when the annual fee is due provided you are a good paymaster.
Incentives for New Card Holder
Freebies? Some will entice the new credit card holder with gifts, free hotel stays and so on. However, do make it a point to find out whether there are hidden terms related to the free gifts. Some will require you to spend a minimum amount of money or transaction before you qualify for the gift. Sometimes you will discover that to utilise the free gift, you will have to “top up” by paying for other incidentals. In such cases, it is obvious that it not really free. Do read the fine prints. Financial institutions are rarely likely to be generous 
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Better To Sell Than Risk Repossession
You get yourself a new car with the assistance of a loan or hire purchase scheme. Beaming in pride, you start using the car. Over time however, life circumstances cause you to skip an instalment or two in your repayments. Before you know it, you’ve skipped enough number of instalments that the car repossessor now knocks on your door with valid papers to repossess your car. You say bye bye to your car but your nightmare does not end there.
It is challenging indeed (and emotionally draining) to have to deal with repossession. Once your car is repossessed, your car is at the mercy of the financial institution’s taking of steps to dispose off your car for the best price - usually through an auction. You will be lucky if they manage to sell off your car at a price high enough to cover your existing outstanding loan. Otherwise, you will still have to top up the remaining outstanding amount. Worse still, your name gets into a bad credit report.
Having an adverse credit report will reduce your chances of getting another loan in the future as financial institutions are wary of granting credit to someone who has a previous record of defaulting on payments. Your first and foremost aim is to ensure that your name does not end up on the bad credit report. In Malaysia, adverse credit records are maintained by the banks through a system known as CCRIS with Bank Negara Malaysia’s approval. Previously, there was also CTOS, which until recently had made many enemies amongst those who have been sued by financial institutions. Read more