How to Save Money Using the Balance Transfer Credit Card

Credit cards are now essential for many people when it comes to paying bills, purchasing items, shopping, and the like. Using lines of credit is indeed very convenient rather than making cash payments. You just have to swipe them instantly and you are done.

There are several advantages to using cards instead of cash. One example is you have easy access to services and goods because visa and MasterCard are accepted widely and even internationally. In addition, using credit cards is an effective and safe way to keep track of your finances.

However, having and using credit is not that easy. You have to know a lot of methods when using your plastic. One specific method would be the credit card balance transfer. This allows the a cardholder to transfer his current balance to another card. There are many companies that offer low APR credit card applications to encourage clients to sign up for them.

Most credit card companies offer balance transfer credit card deals that will help you save large amount of money in interest payments. Searching on the web is the easiest and most convenient way to look for reputable banks that offer enticing choices you can choose from.

You should read terms carefully and make sure you would be able to save more than with your previous one. Some card companies even offer APR balance transfers with 0% interest. However, their annual fees cost too much. So you must be careful and be practical when choosing the right company. You should also make sure that your balance transfer does not go beyond the limit of your new credit card.

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AKPK expects higher debt problem cases

Kuala Lumpur: Credit Counselling and Debt Management Agency (AKPK), an agency set up by Bank Negara, expects a surge in the number of financially-distressed individuals seeking counselling and debt management services this year.

Chief Executive Officer Mohamed Akwal Sultan said more people might not be able to meet their financial commitments in view of the current economic downturn.

There could be more lay-offs and shorter working hours, rendering people in a tight spot for money.

"Last year, the number of counselling services increased to 41,447 from 25,320 in 2007," he told Bernama.

"AKPK also handled 11,958 cases involving debt management programmes in 2008, an increase from 7,614 cases in 2007," Mohamed Akwal said, adding that he expected more cases on credit cards and housing loans.

The Association of Banks in Malaysia (ABM) recently lowered interest rates for credit cards by between 0.5 percent and 1.5 percent for Tier-1, Tier-11 and Tier-111 credit cardholders.

Late payment fees will be slashed to a minimum of RM5 and a maximum of RM75 effective March 31.

However, many parties viewed the interest rate cut as not good enough.

Mohamed Akwal said the reduction would only benefit the 40 percent who currently elect to leverage on the credit made available under the credit cards.

It may also encourage this group to make more regular minimum payments to move from Tier-III to Tier-I to enjoy the lower interest rate.

He said credit cards should be used as an electronic means of payment mechanism and not a source of long-term credit.

Interest rates for credit cards will normally be higher than other secured loans as the risk is higher.

However, interest rates on credit cards in Malaysia are still one of the world's lowest.

"Though the non-performing loans in Malaysia are not as bad as in the United States, it is crucial for the people to live within their means and only buy things they can afford," he said.

AKPK's counselling services are available to all individuals who need help to manage their personal debts with financial service providers regulated by Bank Negara.

However, there is a qualifying criteria for AKPK's assistance, he said.

An individual has to have an income after meeting his or her expenses, total debt does not exceed RM2 million, not under advanced litigation process and is not a bankrupt.

For financially-distressed individuals, who met the qualifying criteria, AKPK will offer a debt management programme (DMP) to restructure their loans or extend repayment period and flexibility in loan repayment amount to suite their cash flow.

"As long as the DMP applicant abides by the terms and conditions, banks will not take legal action," he said.

According to the profile of individuals who have enrolled into AKPK's DMP, Mohamed Akwal said it was the Malaysian men who were the most debt-ridden.

"In a household, it is usually the man who is the main breadwinner and manages the household. As such, they are the ones who normally take loans," he said.

Mohamed Akwal said AKPK's counselling and DMP are available at all its eight branches in Penang, Perak, Melaka, Johor, Pahang, Terengganu, Sabah and Sarawak.

Two new branches in Kota Baharu and Alor Setar will be opened this year, he added.

3 Important Tips to Get Out of Debt

In this day and age, it only takes a few financial missteps and many consumers can find themselves in trouble. The one factor that exacerbates this is debt, or, to be more precise, overwhelming debt.

For some consumers, getting out of debt simply means tightening the household budget and being more stringent on new purchases. For others, the challenge of getting out of debt can be more daunting. In either case, the best self-help plan for relieving debt is planning and discipline.

Here are 3 important tips to be practiced for getting out of debt.

• #1 : Stop increasing your debt.

If you have any credit cards that are maxed out, cut them in half. If you have more than one remaining credit card, cut them up. When you finish, you should have no more than one credit card. Also cut up any “convenience” cards, such as gas cards, department store cards, etc. You will use your one credit card ONLY to buy “must haves” (see below) until you can get your spending fully under control.

• #2 : Record your spending.

The idea of writing down what you spend is a concept most people find annoying at best and useless at worst. However, this is actually your key to getting out of debt. You’re in debt because you spent money you didn’t have. If you’re like many people, your debt didn’t come from one single huge purchase; it was trickles of spending amassed over time. Avoiding more debt starts with knowing what you are spending your money on. Each day for one month (at least), write down every penny you spend, no matter how small.

• #3 : Categorize your spending.

Categorize your monthly expenses into logical groups of “Must have,” “Should have,” and “Like to have.” “Must haves” are things that will cause harm if you don’t buy them, such as food, rent, medicine, pet food, etc. “Should haves” are things that you need, but can do without for a little while, e.g., new clothes for work, gym membership, etc. “Like to haves” are things that you don’t need, but enhance your life, e.g., magazine subscriptions, newspaper, cable tv, weekly coffee with friends, IM on your phone, etc. By doing this, you’ll have a good idea of what you spend your money on, and you’ll be able to figure out where you might need to cut back on spending. You don’t want to eliminate all of the “should haves” and the “like to haves,” but take a look at those first. One of your expenses will be paying off your debt. You will want to always pay more than the minimum required, otherwise it will take a really long time to eliminate your debt. For example, a single credit card with just a $1,000 balance and 19% interest will take about FIVE YEARS to pay off by making only the minimum payment of $26. Paying the minimum, you will spend $1556.40, with the Total Interest Paid: $556.40! Paying only the minimum payment will equate to giving them 55% more than you actually borrowed.

How To Get Out Of Debt

Step 1: Discover the Size of the Problem

One of the things that people are in serious debt do is ignore it -they don't open the mail which brings the demands for final payment or shows them the 100's of dollars they are spending on credit card interest. They are in denial. You cannot fix any problem that you are in denial over. So if your debt is a a problem to you or your family you need to face it and see the size of the problem.You need to learn how to save money - not spend it!

Find out the size of your debt:

* over due bills balances owing, payment terms, interest rates

* credit cards, store cards and similar - balances owing, minimum payments interest rates.

* car loans

* Hire Purchase payments

* house mortgage

* loans from friends and family

So this is the size of problem. Start a spreadsheet or piece of paper - for each loan take a line and note:

* the total debt

* the interest rate

* minimum payment terms and date e.g. 20th month

Step 2: Decide On your Goal

The total figure you came up with might be a little scary! Getting out of debt sounds like a good idea - but does that mean that all debt is bad? Not all debt is bad - borrowing to buying assets can be a good thing - you can out ahead financially if the asset you buy increases in value by more than the interest you pay on the loans.

Unfortunatley a lot of people are confused as to what is an asset - an asset is something that makes money. A rental property or a share portfolio are assets - they make money. A car, a widescreen TV, a gorgeous pair of Italian shoes are not assets - they not only don't make money but their value commonly drops significantly as soon as you buy them, worse some of them will cost you money to keep - such as the car. So do you want to be debt free? Consumer debt free? Once you are free of consumer debt your options to save and invest are wide open.

Step 3: Now prioritise your debts:

Top Priority Debts

Those that by not paying you are endangering your basic quality of life and your credit rating:

* your rent

* your utilities including power, telephone, water

* other utilities: broadband, pay TV,

* any bill that is stamped final demand or which has been forwarded to a debt collection agency

Lower Priority Debts

The other debts probably are in the second priority pile. These may include:

* Loans from families and friends

* credit card debt

* the mortgage on your home

The first group has to be paid and now. Contact your creditors, talk to them, agree a payment schedule and STICK TO IT.

Cancel the utilities that you don't really need: pay TV, broadband or downsize to the cheapest package. Check the fine print, you don't want to be hit with too many penalties for cancelling, but at the end of the day paying a termination fee will probably less than another 3 months of payments.

The lower priority debts. Most people seem to get into debt with credit cards, especially consumer debt. In general pay off the debts that you are paying the highest interest rate on first. However if you would like some instant gratification, take on some of the smaller outstanding amounts first so you can see clear progress.

Step 4: Analyse your Spending

You weren't born in debt! How did you get into debt - was in an unfortunate event: marriage split, loss of a job, illness. or has it just developed slowly over the months and years? If its the latter the issue is clearly that you are spending more than you earn. If your debt is the result of a one-off event then you still need to find some cash to pay of your debts and get your self back on a financially secure footing.

Buy a small notebook and carry it around for a week or 2 - write down everything you spend - everything, the paper, the milk, include anything you put on a credit or debit card too. It's OK I'm not saying do it for ever - just do it for a typical 2 week period- not when you're on holiday, not just before Christmas, just a typical 2 week period. Ideally get everyone in the household to do - or at least those that are contributing income! Now analyse your spending: you can use software or a spreadsheet or pen and paper.

Allocate your spending to some basic categories like:

* groceries

* lunch out

* takeaways

* cloths

* vehicle running expenses

* public transport

* hair dresser

* coffee out

* gym fees

Do you see a pattern - are you shocked at how much your take-away coffees are costing? Had you not realised what you were spending on lunch - whatever it is I guarantee you will find a number of items which shock you.

Step 5 Decide on an Action Plan

Reduce your regular spending

Budgeting is a bit like dieting - if you decide that from now on you are spending nothing on clothes, lunches, shoes, clothes or whatever else it is that you spend money on - it will last a week or maybe a month and then you'll have a blow out. Budgeting, just like dieting, has to be a lifestyle change, and it has to sustainable. If you live to own designer clothes then that's OK, but maybe you can limit your outfits to 3 a season rather than 5? Budgeting is the key to that age old question: how to get out of debt. If you love to go out on the town and drink and party - can you limit it to twice a month, rather than once a week? Yes you are going to have to make some changes but think about your goals and dreams not the spending reductions now!

Sell things

Can you sell stuff to pay of debt? EBay and other auction sites are wonderful places to get rid of your unwanted clothing, the glasses given as a present 5 years ago which you've never used. The toys the kids have grown out of. You not only make some cash you get to de-clutter your life as well!

Can you sell your car? It's not just the car loan that's costing you money but the insurance, taxes, registration, services and petrol! Can you reduce from a 3 car household to a 2 car household or a 2 car household to a 1 car household plus bike or scooter? You not only save money - you save the planet as well? Even if you need to keep the cars you have look at selling them paying off the loan and buying a car you can pay cash for - no more car loan ever that sounds good doesn't it?

Substitute cheaper items

Can you move to a cheaper apartment, if you rent?

Can you save at the supermarket by going to a cheaper one? Can you buy no-name brand items on the things that don't matter i.e. they all taste /act the same e.g. butter, sugar, flour, toothpaste, shampoo, toilet paper. If you like luxury foods then buy them on special, if you have the space and the cash buy items you use all the time in bulk if its cheaper. Take a calculator with you to do the sums!

Can you buy books or clothes at a second hand shop rather than new - you will probably find stuff you would never find new anyway!

Get a cheaper credit card.

Yes I am saying consider applying for another credit card! I am NOT saying use it to buy stuff on though! One of the reasons people have trouble getting out of credit card debt is the punative rates of interest charged and the low minimum payments. So increasing your payments will certainly help - but try to reduce your interest bill will help even more!

One of the reasons to protect your credit rating is that if you are still a good risk you may be able to find a new card which will allow you to transfer an outstanding balance for a low or reduced interest rate. Say you believe you can pay your card debt off in 6 months but you are currently paying 20% interest, if you can find a 0% or 5% credit transfer deal take it - and focus on reducing the debt to zero in the time frame. Whether you cut up the card or not depends on whether you can trust yourself not to get into debt again with it. Smart people don't fund their lifestyle with credit card debt - they use a credit card to reduce bank fees, earn frequent flyer points or other awards and pay it off when due - banks hate those who do that!

Extra Income

Can you go for a promotion at work? A new job? A second job? Even if for a short period of time this might be worth it - though check how much you will nett out of it after work expenses, commuting, and taxes.

Get the teenagers out working a paper-run or in a fast-food outlet - its a good way for them to learn about real-life anyway!

I said earlier that budgeting is like dieting. Its actually a lot easier than dieting - with dieting you can go for weeks without seeing any results, you give up for a weekend and all the weight comes back on! Budgeting isn't like that though - I guarantee that if you reduce your debt you will start saving. Its a snowball effect, as you reduce debt you reduce the interest you are paying which allows you more spare cash to reduce more debt.

Step 6 Putting it All Together

So now you have a list of debts A some cash from selling things Extra income coming in from you extra job Less money being spent on the necessities of life.

Now go back to you list of debts. Start with your highest priority one, how long will it take to clear it with the extra cash you have? Now once you've cleared that one, take the extra cash, plus the re-payments you were making on the initial debt (no longer needed as you cleared it ) and apply it to the next item on the list as and so on. It really does work.

Remember though no more getting into debt for consumer items otherwise you will put yourself back at the start again! Remember that getting out of debt is just a tool - the real aim is to take control of your life and fulfil your goals and dreams.

Credit Card Debt Management Can Help To Prevent A Financial Crisis

For how many years have you used credit cards? Are you facing any difficulties with the use of charge cards? Have you ever identified the mounting problems you are facing at the? If not, keep it in mind that the arbitrary use of credit cards without doubt leads to the emergence and continuation of a great financial crisis, and in a majority of incidents the entire situation gets out of hand, even before you start to realize it.

If you have ever faced, or are facing any similar type of situation it is imperative for you to keep your finances in check, and at the same time be aware of the saga of credit card debt management. If you become attentive, and go through the entire issue you will find that there are several credit card debt management programs that are free or cost little, and facilitate you to regain control of both your finances and personal life.

Therefore, talk to the manager of a credit card debt management program, he or she is the best person to help you get out of this situation. They can show you the existence of several such programs or how you can easily simplify your payments. Once you are out of this credit card mess, you will get a great option of selecting any form of payment with a low interest rate, and that will enable you to save money. It will also reduce your debt by almost half and the interest rate will be lowered to a great extent.

How does this credit card debt management appeal to you? Many experts say that the removal of any economic crisis is possible by an effective credit card debt management and the ultimate goal is making one debt-free within a couple of years.

Acknowledge and Act

How do you manage after you have caught up? For this you need excellent planning and the will to stick to the plan. The efficacy of credit card debt management lies in the fact that, before purchasing any product on credit, you or any concerned consumer should be conscious of the way you plan to repay it. With your desire for expensive products, keep in mind that you will be led to a long-term debt. Reckless buying always adds to a crisis. If you fail to manage properly, take the help of the non-profit credit and free card debt management programs. They are the best way to help you get rid of your existing financial situation.