Then you perform a Cash Advance at any ATM, though the interest rate you will be paying will be high, no doubt. The Cash Advance will provide you the necessary cash to use,...

Not if you pay back on time.

Cash advance don't have cooling period of 20 days. The moment you take out cash from ATM, the interest is already charged. If not mistaken, for standard cards, it will be 1.5% fees + 1.5% upfront interest for the amount.

What I read from bro hansel's comment is that with a large limit CC, you may not need to keep spare liquid cash (like FD, PNB funds etc). You can invest the cash into higher return investment. Maybe 2-3% above the FD/PNB funds. In the end, the cash meant for emergency may not even be needed at all. Over decades, the difference may be big

cash advance will attract cash advance fees and interest charged immediately

Bro Ramjade talking bs,....

Yes, that's what I meant, bro Showtime,...

Mana I tahu ada fees. Thought is just normal payment few days later.

Thank you for the above responses to my previous post. I think some of you were in agreement that not every dollar we saved needs to “work hard” and generate a return higher than FD.

That post was not about how likely or how possible was a bank run. Nor how risky a mutual fund could be.

If the reader could read between the lines on “hope the fund is run transparently without scandal”, he would see that I was not referring to the usual mutual fund, since I would not be comparing the usual mutual fund to a fixed deposit for a “peace of mind” vehicle to hold the large sum of money in reserved for the rainy days in case a large amount of money is needed for medical purpose or in case of being retrenched.

There is a fine line between seeking higher returns on our savings and whether we could face and handle the associated risk in seeking the higher returns.

A financial tool that can be considered as safe and sound to one person, it might not be the same to another.

The financial tool might have a good or great track record, but is it timely to put your money into it currently?

Quite often in this forum, there were queries on what to do with a large sum of money, how to invest it, which is the better option.

Before considering which option to take, I think it is worthwhile to take a step back and consider how the large sum of money comes about.

How long does it take to save it? How many years and months of savings does it take?

If it took me years and months to save this X amount of money, slowly saving it each month in a savings account, and slowly switching some of it from the savings account into fixed deposit, wouldn’t it be riskless of me to put caution aside and switch this X amount of money into whatever investment?

IMHO, the smarter way of managing our personal finances is getting to know about the financial tools that are available in the market and the differences between them.

Get to know about FD, their board rates and their promotion rates, and the minimal amount to open the FD.

Same with mutual funds… what type of funds are available in the market, how much it cost to purchase them, the minimal amount to open an account, etc. etc. etc.

For example, 10k is the minimal deposit to get the promotional FD rate and 1k is needed to open an account to purchase a mutual fund and the next and subsequent purchase can be as low as RM100…

If I knew these facts, it could be option to diversify my savings much earlier instead of building up my savings in an savings account before transferring the bulk of it to FD just to get the promotion rate.

Instead of simply building up the savings and targeting a X amount to have (in reserved as emergency fund), I could also put part of the monthly savings into a mutual fund.

This way, I have also lessen any market risk since my purchases in the mutual fund is spread over a long time, little by little over many years.

=========

PS. In one of the mutual funds online platform, in a purchase plan, the minimal amount to open an account is RM100 instead of the usual 1k.

Over the years, my ‘emergency fund’ varies…

When I first started work, and with very little savings, Socso was my fallback... till I managed to buy a short term life insurance.

The short term life insurance was very cheap but it was important to have since my job required me to travel out of office. Road accidents seemed to be very high those days. The insurance would take care of any funeral costs.

Latter, the amount to target was a few months rent – just in case I found a new job in another town and need to move… 3-4 month rent as deposits and in advance.

Nowadays, and much later in life, with savings and money here and there, which money is the reserved for ‘emergency’ is very blur.

The 2 main reasons to hold an emergency fund was also getting weak…

Being retrenched and jobless… can consider early retirement if there are ample savings in bank and EPF.

Medical emergency… well, how much do one needs to set aside. Millions or hundreds of thousands as would be suggested by insurance companies?

Or it could also be any amount that you happen to have. So whatever savings you have is just fine… and you will make do with it. So it is not really necessary to target X amount in reserved for medical needs.

Whatever little or much you are holding in reserved for medical emergency… if it is unused, it can be converted to funeral expenses… however little or much you were holding.

Again I don’t see it, the funeral expenses, as a X amount you must target to have. You make do with however little or much you have.

Come to think about it, so are weddings. You can make do with whatever little or much you have.

So are many other things in life.

Achieving financial freedom can be as easy as you want it to be.

One thing one cannot make do without – savings.

Where got such good conveniences as getting cash on the spot without high fees charged ? Common sense, bro,...

hi all sifu...
im newbie.. want to ask
if i do bank transfer rm10,000
some bank charge, per annum or one-time upfront handling fee
anyone can explain per annum and one time upfront? which 1 is better for us to apply?
From my basic knowledge, one time upfront not worth if in case i loan 24 mths but i able to pay within 12 mths.
im not sure about per annum, if borrow 24mths 5% per annum, how to calculate the 5%?

can someone explain here? thanks!!

Bank Transfer? are you referring to a loan?

If loan 5% per annum,interest calculate daily/monthly or straight line basis?

I have yet to do any credit card transfer or taken any personal loans, so the following is not from hands-on experience but from common sense assumptions.

An interest free or 0% credit card transfer should be same as buying things in an instalment plan that is interest free or 0%.
For example, if buying a TV that cost RM2,400 under 0% interest, and 24 month instalment plan, the monthly instalment is RM100. RM100 will be charged into your credit card every month for 24 months.

Similarly, the transfer from one card to another card, the monthly amount will be charged to your 2nd card every month for the agreed period to pay back.

In personal loans, the interest calculation and instalment amount should be same as in a car loan – that is a flat rate interest calculation.

For example, if the loan amount is RM10,000, interest is 5% and loan period is 2 years, the monthly amount to pay is:
10,000 x 5% x 2 = 1,000
(RM10,000 + RM1,000) / 24 months = RM458.33 monthly instalment.

In several previous posts, the difference between a flat rate loan (as in a car loan) and balance interest rate loan (as in a housing loan) was explained.

Also explained was the lump sum to pay if we want to terminate the loan with a lump sum settlement. In a flat rate loan, the lump sum to pay will follow the “rule of 78” calculation.

There were people who don’t understand the “rule of 78” and yet tried to outsmart the banks by “cleverly” taking a bigger loan than necessary and taking a longer repayment period than necessary, and thinking that they can save some interest cost by doing a lump sum settlement as early as possible. Say taking a 7-year car loan, and then want to do a lump sum settlement the next year.

No, don’t try to outsmart the banks which are run by financial professionals.

Whether or not there were any upfront handling or administrative fees, the operational costs are usually included in the interest rate. For example, the interest rate for an 18 months car loan will be slightly higher than the interest rate for a 7 years car loan.

i referring to credit card transfer. 2 cards got outstanding payment and wish to transfer it to new card with balance transfer, thinking that will save the monthly overdue charges. Is this a good way for me to do it?

hi bro, thanks for explaination, understood the calculation. ya... you hit my concern, thinking if i BT 24 mths, and i settle it within 12 mths, am i able to save the interests fee for the remaining 12mths?
2. BT 10000 to my new cc, means bank will lock my card rm10k, everymth pay 1000, and my credit limit will increase 1k every month. am i correct?

Thanks!

This post has been edited by x88yunkw: Jan 26 2019, 12:34 PM

I am afraid I have some doubts whether to answer your questions in a straightforward manner without cautioning you on what you are about to do. It seems to me, you are in a bit of financial trouble and maybe heading deeper into more troubles.

Credit Limits...

Why are you concern of credit limits? If you are touching the credit limit which is the max amount you can have on credit, this is a red flag and a warning sign that you are spending beyond your means/financial ability/salary.

Maybe you are looking at credit cards as having a Personal Lender on standby. But I view credit cards as a mode of cashless payment and always pay the monthly statement in FULL.

I have been using credit cards for years, and I have never ever paid any interest charges since I paid in full on due date.

Balance Transfer...
When you do a balance transfer from one card to another, you are clearing the first card. In other words, you will have back the max credit limit in this card. See… I think I can see light bulbs flashing around you… you will then have a clean card with the max credit limit at your disposal.

If you balance transfer from 3 cards, you will have 3 clean cards.

In the card you balance transfer into, the monthly statement will not show the whole transferred amount. The instalment amount will be billed monthly. So, depending on what plan you selected and how many months to pay back, the monthly instalment amount will not affect or touch your max credit limit in this card.

=============

To answer this query on credit card transfer, I have looked into Maybank webpage on Balance Transfer. To know the full details, looked into the Terms and Conditions pdf and the Product Disclosure Sheet.

There are several “plans” available and each with different repayment period from 6 months to 36 months. Each of them with slightly different terms and conditions. Some with reducing balance interest, and some with flat rate or straightline interest method. And there are various upfront charges and fees in each plan.

So, how to choose which plan to take? Which has the best and lowest interest and fees?

No, you should keep it simple and simple reasoning.

Forget about lowest interest option… since you are already incurring cost of interest in whatever plan you choose to have. Think of this cost of interest as necessary expenses and don’t over think on saving costs.

The best plan is the one with the instalment amount that you can pay WITHOUT FAIL every month. So, you need to think carefully how much you want to pay every month and how much you can pay.

You can use online calculators to estimate the instalment amount.

Though this instalment amount is billed into the monthly credit card statement, it MUST be paid in full. If it is not paid in full, its remaining balance will incurred the highest credit card interest at 18% p.a. untill it is paid in full.

So, not only the one-time upfront fee and charges were paid, another cost is added onto the late payment.

(Note: in certain plans with shorter payment period, instead billing into the credit card statement, a separate account will be opened for payment purposes.)

Thanks bro for your explanation.tqtq.

Happy New Year and Gong Xi Fa Cai.

Continuing from previous post… some may wonder why I don’t suggest a lump sum settlement on a personal loan or a credit card balance transfer when there is extra money to do so but carry on paying the monthly instalment till completion.

There are 2 reasons.

The first reason is due to the rule of 78 in calculating the outstanding balance. Though there would be some cost savings, the savings is not that significant because the cost of interest is already built into the loan when using rule of 78.

The other reason is that it would be better to hold onto the money and increase the amount of cash we have in hand as an emergency fund.

The need to have a personal loan or outstanding balance on a credit card is due to insufficient emergency fund to meet unexpected expenditures.

If the money is used to do a lump sum settlement on a personal loan or credit card transfer, and if there is inadequate savings, then we would need to resort back to taking another personal loan or using a credit card to meet any unexpected expenditure.

This could lead to an endless cycle of being in debt of a personal loan or credit card debt.

As in the above scenario of doing a credit card transfer from 1 or 2 cards, it would be better to carry on with the instalment plan, whether it is 24 or 36 months till completion. Whatever extra money there is, it should be used to pay the credit card(s) outstanding balance.

1) Do not just pay the minimal amount but try to pay as much as possible to reduce the cost of credit card interest.
2) Reduce transactions on the card and keep a tight budget on the monthly amount to charge on the card.
3) Continue (1) and (2) till the outstanding balance can be paid in full every month.
4) Slowly built up savings and emergency fund after achieving (3).

Hopefully, with adequate savings, there will be no more need to have a personal loan or be in credit card debt to meet any unfortunate and unexpected expenditure.

Hopefully, in the New Year, there are only good fortunes and no unwanted events, and our wallets grow fatter, not thinner!

Gong Xi Fa Xai.

Well said, couldn't say anyway better, thanks

Very good explanation and info. Thanksss.