Late credit card payment charges

Would you know that if you do not make full payment on your credit card statement balance on or before the due date, you will lose the 20 days of credit free period for both the current and new transactions posted in the statement?

This is a little-known rule that most credit card holders in Malaysia are unaware of. In addition to the RM50 late payment charge, the finance charge is even higher.

As an example, let’s say that in your October statement of Nov 10, your outstanding charge balance is RM1,000 and you need to settle it by 22 Nov. But for one reason or the other, if you forgot about the payment and do not settle the outstanding in full by 22 Nov, how much do you think is your finance charge?

Let’s assume you settle the full outstanding of RM1,000 on 24 Nov. You would expect the bank to charge a finance charge of 17.5% pa based on daily calculation from 22 Nov to 24 Nov, right?

Wrong. For each of the transaction in the statement, the interest will be charged to you beginning from the date that the transaction appeared in the statement (that is, the transaction posted date) until 24 Nov.

In addition, all new transactions that have not appeared in the statement will also attract interest charge. The crux of it is that the bank is penalising you twice on the old and new transactions.

Also, if you do not settle the outstanding in full before due date, you will lose the 20 days of interest-free period.

It’s chilling to know all this, and this is a contributory factor why so many people are falling into credit card debt. The banks will not highlight this point to the public. Why should they? It’s one of their main revenue streams.

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