A credit card is not free money. And ideally, you shouldn’t get a credit card to buy something for which you don’t have the money for. That being said, if you know how to manage your finances, your credit card can actually do wonders for you and help you maximise the value of your spends.
In the concluding part of the second episode of our ongoing video series “Let’s Talk About It”, Illi, Virgel and Darwin continue their fun conversation on credit cards with Aaron, the blogger behind the popular Mr Stingy blog.
Check out the video below for a number of smart credit card tricks and hacks that “Mr Stingy” shares with our viewers:
In the video above, “Mr Stingy” shares a particularly cool but simple trick to manage your finances better with your credit card. Normally, a credit card comes with a 20-day interest-free period, meaning you have 20 days to pay off your credit card bill from your fixed bill generation day, without having to bother about steep interest charges (ranging from 15-18%).
Check out Part 1: “Don’t Pay Just the Minimum Amount Due”
Mr Stingy suggests that if you’re planning to make a big-ticket purchase, say a gaming console, buy it with your credit card a day after your monthly billing day. This will ensure your purchase gets billed the next month (and not the current month) giving you 30 extra days (50 days in total) to pay it off without having to incur any interest charges or other late fees.
Check out these 2 tables to understand how you can do this. Let’s assume your billing day falls on the 12th of January. So your last day to pay off that bill without paying interest should be on the 1st of February, 20 days after the billing day.
In the first table check out what happens when you make a big-ticket purchase on the 11th of the month, i.e. a day before your monthly billing day. You get only 20 days of the interest-free period:
|Day of the big-ticket purchase||Monthly credit card billing day||Last day to pay the credit card bill (which includes the big-ticket purchase)||Interest-free period|
|11th of January||12th of January||1st of February||20 days|
Now let’s see what happens when you make the purchase after just two days, i.e. on the 13th of the month. Your big-ticket purchase will be included in your next monthly bill.
|Day of the big-ticket purchase||Credit card billing day||Last day to pay credit card bill (which includes the big-ticket purchase)||Interest-free period|
|13th of January||12th of January||1st of March||50 days|
So, by smartly timing your big-ticket purchases, you can actually enjoy 50 days of credit card interest-free period — 30 days more than the regular 20-days period. That means you basically got one extra month to pay off your big-ticket purchase. So cool, right?
Stay tuned for more such videos in our ongoing series Let’s Talk About It!
Watch Episode 1 Part 1 Feat. Suraya: The Importance of Delayed Gratification
Watch Episode 1 Part 2: “Technically, a Credit Card Is Free…”
In the meanwhile, give a read to our BBazaar Malaysia blog to get more tips and hacks on a number of interesting topics like credit cards, loans, budgeting, personal finance, investments, insurance, real estate, career, travel, weddings, making money, and our favourite — All Things MALAYSIA!
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