Settle Your Credit Card Debt

Overview

Generally, Credit Card is a disaster. It ruins your life and damage your cash flow. Normally, we will say that " I just use credit card during emergency", " I just use my Credit Card for fuel". But you know what? This is nonsense. We will use it at anytime, to buy unnecessary things. Mainly because influenced with bad promotions that kill us like "BUY NOW AND SAVE 60%"..."BUY AND SAVE NOW" or because of lack of knowledge about Wants and Needs and few important financial knowledge. The fact is, if you buy, you spend out your money. You take out your money from pocket and wallet. This is totally not a saving, because you spend out your money, out of your pocket. Can't you see it? You must really understand In and Out of your cash flow now.Please..if you buy, it is not save at all. Don't get lured into making a wrong decision.

The Fact About Credit Card

Credit Card, generally, charges you at 1.5% per month. It accumulated to be 18% per year. However, in fact, if you pay the minimum payment every month and you pay beyond the due date, you are being charged more than 18%. This is simply because you will be charged for the lateness - Late Charges Fee. Normally the charges is 1% over the remaining balance by daily basis. Remember the word here - daily basis! It means charge on charge or double charge. And it continues until you make the payment. The calculation is made to be very complex in order to confuse you more and more.

Just take example - you used RM1000, minimum payment will be 5% which is RM50. When you delay the payment, you will be charged 1% on RM1050, which is another RM10.50. If you delay again, you will be charged and got penalty another 1% on RM1060.50. It never stop until you pay your debt. Example here shows that instead of being charged 1.5%, you are being charged 2.5%.

Normal Settlement:

If you used RM10000, with normal minimum payment constantly, it takes 87 months or 7.33 years to settle. The calculation is as below:
First Month: RM10000 X 1.5% interest = RM10150. Minimum payment 5% = RM10150 X 5%
= RM507.50.
Second Month: RM10150 - RM507.50 = RM9642.50. Interest = RM9642.50 X 1.5% =
RM144.64. Total Up Usage plus interest = RM9787.14. Minimum payment 5% =
RM9787.14 X 5% = RM489.36.

The same calculation goes until 87 months. With the calculation:
Total amount you pay for 87 months = RM13973.64.
Total interest of your payment for 87 months = RM3973.64.
Total interest rate for 87 months = 39.74%.
(Total amount you used = RM10000).

So now, how to settle this earlier or faster? 7.33 years is not a short time. It is more burden to you if you used up more than one credit card. I have a better way to help you to settle this earlier.

Fast Track Settlement:

The fastest way is to convert the payment into Easy Payment Installment Plan. Easy payment plan means you fix the rate and the installment. When you fix the rate and installment, the benefit is you will definitely get lower interest rate. It just a matter which bank you select, or which credit card you use and how long the installment is allowed whether 1 year, 3 years or 5 years.

If you take the same example as above, whereby you used RM10000, and find a better way to settle it. The best rate now for Easy Payment Installment Plan is 6.33% per year. If we round the number to 7%, it means you save 11% interest per year. Is it great? Of course my dear. The calculation is as below:

RM10000 / [1 - (0.633 X 3 years installment)] = RM12345.68.
RM12345.68 / 36 months installment = RM342.94.

So, you just pay RM342.94 for 3 years, instead of normal payment with minumum payment for 7.33 years!
Total amount you pay for 36 months = RM12345.68.
Total interest you pay for 36 months = RM2345.68.
Total interest rate for 36 months = 23.46%.
(Total amount you used = RM10000).

In summary:
Normal Credit Card Easy Payment
Total amount paid RM13973.64 RM12345.68
Total interest paid RM3973.64 RM2345.68
Total interest saved = RM1627.96
Total interest rate 39.74% 23.46%
Total interest rate saved = 16.28%
Total months paid 87 months (7.33 years) 36 months (3 years)
Total months saved = 51 months (4.33 years)
You save a lot my dear!!!...

5 Best Banks To Choose for Easy Payment Plan are:

1. RHB Bank = 26% for 48 months installment.
2. EON Bank = 26% for 48 months installment.
3. Alliance Bank = 26% for 36 months installment.
4. AM Bank = 22% for 36 months installment.
5. Maybank = 26% for 36 months installment.

The Best Method

Do you think this is all? The answer is no. You see, when you trap your goodself in debt, it is tremendously hard to get out from it. Unless you know the method. Mosha Management can assist you understand more about debt and how to solve the financial problem. Please continue to read Mosha Management blog. The important is knowledge. The important is the method. The important is you know you want to achieve the financial freedom. And, the most important is you want and have a strong desire to be a financial freedom person.

Mosha Management offers a great value to your investment. Please get it from http://www.superbfinancialmanagement.blogspot.com/.


-Managing Director-

Mosha Management
Creative, Different, Trusted