The Star Online recently reported that about 47% of Malaysian youths were under high credit card debt in 2017, and more than 3,400 people between the ages of 20 and 30 sought counselling and help from the Debt Management and Counselling Agency (AKPK).
Meanwhile, the AKPK said that only 55% of Malaysians pay their bills on time, which is 25% below the world average, as reported by The Edge Markets.
“Based on AKPK’s own data as of Aug 31 2018, 40% of 230,000 indebted individuals [whom]we have helped, admitted to poor financial planning on their part, and 57% of these cases involved credit card woes, while about 26% was from personal loans,” said AKPK chief executive officer Azaddin Ngah Tasir in the report.
So it’s a fact that an alarmingly high number of Malaysians are dealing with credit card debts. The good news, however, is that there are many ways for you to steer clear of credit card debt and one of them is to work towards lowering the credit card interest rate, which can help you avoid incurring more debt.
We’ll show you a few simple steps that you can do to get the interest rate lowered on your credit card.
1. Get complete clarity on your credit card and your credit score
Take a look at your credit card’s current balance, statement due date, grace period, and other terms prior to calling the customer service to understand what you’re dealing with. Checking your credit score before you contact your credit card company would be great too.
Having a good credit score would definitely give you the upper hand when you make the request to lower your card’s interest rate. It shows your credit card company that you’re financially responsible, where you’re likely to repay what you owe and on time.
To find out what your credit score is, you can get your credit report from the two main sources in Malaysia – the Central Credit Reference Information System (CCRIS) and the CTOS Data Systems Sdn Bhd (CTOS).
2. Work towards improving your credit score
Aim for a score above 718 to increase your chances of getting a lower interest rate on your credit card. The easiest way to get a good score is to maintain a positive payment history. This could mean never missing out on payments, paying in full (or more), or paying on time.
We have a few useful tips to improve your credit score if your credit is less than favourable. Work on improving your credit health first.
It’s also highly recommended that you review your credit reports as often as you can (or at least once a year) to keep track of any errors that could potentially decrease your score. Meanwhile, avoid incurring massive debt that could ruin your chances, for example, putting medical expenses on your credit card.
3. Look for other competitive offers
No credit card company and bank want to lose a customer to its competitors, and you can take advantage of this by looking for other competitive credit card offers. Shop around for other credit cards similar to yours with better deals.
Once you’ve found one, use this information when negotiating for a lower interest rate with your credit card company.
4. Make a note of these points to build your case when you speak to the bank
Since loyalty matters, most credit card companies would give priority to their long-time customers. So, to increase your chances, try to get a lower rate for your oldest card. Before you call the customer service number on the back of your credit card, remember to:
- Have the competitor’s info in hand and other useful info like your credit report
- Know the rate you’re aiming for. If your card’s interest rate is over 20%, aim for a 10% reduction. If your card’s rate is 20% or less, aim for at least a 5% reduction.
When you make the call, ideally you’d want to speak to a customer service manager. Be polite and don’t forget to highlight these most important points to the person in charge:
- Introduce yourself briefly – tell him/her your name and how long you’ve been the bank’s customer for
- Tell him/her what you want – be direct and let the person know you’re interested in securing a lower interest rate
- Mention the positive things – for example, you have a good payment history and credit score. It could also help if you mention how much money you’ve spent through the card and that you’ve never failed to repay what you owe
- Mention that you’ve found a better offer – use the competing credit card company’s info as negotiation leverage. And finally, ask if your credit card company is willing to match that offer
5. What to do if your credit card company says ‘yes’ or ‘no’
If your credit card company says:
- Yes – Get the agreement, including the fine print, in writing. However, watch out for the conditions where you’ll be charged with a higher rate if you fail to keep your balance under the credit limit or pay your bill on time
- No – Get some info on how to better qualify for a lower rate. You could also consolidate all your debts with a credit card balance transfer plan, which comes with more favourable repayment terms like an interest-free grace period or simply lower interest rates. That being said, carefully gauge the pros and cons before going for a credit card balance transfer plan.
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