by Ian Fan I just received my credit card statement. There are a lot of credit card terms like statement date, payment due date, minimum payment, and credit limit.
So today, we’re going to unpack what are the terms and jargons related to the credit card. You can also watch the full video below.
Credit Limit
It refers to the maximum amount of money that a bank allows you to spend on a credit card.
Let’s say the (combined) credit limit is RM10,000. So in a month, you can only spend up to RM10,000 on credit.
Billing Cycle
It is the time period between billing statements, and they are usually about 30 days.
Statement Balance
It is an overview of all the debit and credit in your credit card account that was made between the specific billing cycles
Payment Due Date
It is the due date to pay off your statement balance. Assuming the statement balance date is 20th of the month and then there’s a 10 days “grace period”. The 30th of the month is then the payment due date or date at which payment has to be made.
Credit Card Interest Rates
It is the interest rate that is charged by the credit card company or bank for borrowing the money, and they are usually about 15% to 18% per annum.
Annual Fees
As it explains, it’s a fee that is charged annually for the credit card.
The annual fee is usually charged on (successful) application and on anniversary date. So the primary credit card has it’s own annual fee and the supplementary card (may) also has it’s annual fee.
It depends on the bank. Some credit cards, the annual fee is free for life or there’s an annual charge.
Nevertheless, some annual fees can be waived by fulfilling certain conditions. So some banks, the credit card has to be swiped a certain number or times or amount in a year, or by spending certain amount in a year to have the credit card annual fee waived the following year or the following anniversary.
Sales and Service Tax
There’s a RM25 SST on each principal and supplementary card. The SST is charged on activation date and anniversary date.
So let’s say this year 2023 and it’s is your first year with your credit card. You are charged RM25, then the next year when you renew, you’re also charged another RM25 SST.
Minimum Monthly Payment
It depend on the credit card. It’s usually RM25 or RM50 or 5% of outstanding amount, whichever is higher.
So let’s say you spent RM500 in December. In your December credit card statement, there’ll be a RM500 current balance. So the minimum payment will be RM25.
However, if you spent less, let’s say RM100. The current balance (as of 21st of the month) will be RM100. Even though the minimum payment is 5% which is RM5, you’ll still be charged RM25 (or RM50 minimum payment, depending on your credit card).
Late Payment Fees
The fee is usually RM10 or 1% of outstanding amount and that is chargeable up to RM100 maximum.
Cash Withdrawal Fees
Each credit card issuer would set their own cash withdrawal fee or it’s 5% of the withdrawn amount, whichever is higher.
There’s also an interest rate on the cash withdrawal and it’s usually 18%.
Cashbacks
Depending on the credit card company or bank, different credit cards will have different cashbacks or no cashbacks.
If the credit card has cashback, it can be a combination of categories: groceries, petrol, dining.
It can also be split into individual categories: petrol, dining, grocery and Grab, for example. The cashback will be based on the category, the cash back rate, monthly cap, spending.
Watch the video below on cashbacks.
Rewards Points
Different credit card companies will have different reward points and measuring systems.
The reward points can be one for one. RM1 for 1 reward point, or RM1 for 5 points, or RM5 for 1 point.
It depends on the credit card, what points and benefits they offer. Furthermore, each credit card have their own terms for the reward points.
For example, Maybank’s reward points is known as TreatsPoints. UOB reward points is known as UNIRinggit or UNIRM. Standard Chartered is known as 360* rewards points.
Balance Transfer
This is a transfer of the outstanding balance from one credit card to another credit card.
People usually do this, is to take advantage of the lower interest rate or zero interest rate in the new credit card that they do the balance transfer to.
So depending on the credit card, when you transfer a certain amount from the old credit card to the new credit card, you can pay it off across a certain amount of months.
When you transfer the outstanding amount, you want to take note of the one time upfront handling fee. Some banks will have no upfront handling fee, while some other banks will charge a certain percentage of upfront handling fee.
Easy Payment Plan (EPP)
For example, you want to buy this RM1000 item, but you want to spread your payment across a few months, so you can put this (expensive) purchase under EPP.
Before doing EPP, check with the participating store or merchant. You might want to know whether they have EPP and depending on the card, the EPP can be up to 36 months.
Some banks may offer lesser months, like 24 month, 12 months or 6 months EPP.
Then when under EPP, usually there’s 0% interest rate per annum and no upfront handling fee. However, some banks may charge 0% interest rate, but they have a certain percentage of the upfront handling fee.
Nevertheless, always check with your bank and credit card.
If you want to browse a credit card according to your usage and to apply for a credit card, you can apply on RinggitPlus, where you can also take advantage of the promotional offers that they offer.
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