Credit Card. It's convenient, simple and easy to use. It's not heavy and you can bring along wherever you go. For those who can control their finance and know well to manage their spending, credit card is a plastic cash which bring benefits to them. But, for those who spend like there's no tomorrow and use credit card to satisfy their unlimited wants, they will be in big trouble if they keep spending and using their future $$$. Their headache will start when they received the credit card statement. If they are lucky and smart enough, probably they'll be awake and try to settle the credit card outstanding as soon as possible.
But, unfortunately many of those in credit card debts find it hard to get out. They'll be happy just to settle the minimum payment. Some even try to get more cards and keep swiping their plastic cash. With the current outstanding interest rate of 18% per annum or 1.5% per month, it really take a lot of effort to settle a credit card debt. According to an article by Agensi Kaunseling Dan Pengurusan Kredit (AKPK), for someone with an outstanding balance of RM1,000 and decided to only pay the minimum of 5% or RM50 whichever is greater, the amount of interest charged to his card in the first month is about RM14.25 only. This might not sound a lot but if he continues this payment pattern, it’ll take 2 years for him to fully settle the initial balance of RM1,000. The total interest incurred would amount to about RM173.00. If the outstanding balance is RM10K – it will take more than 7 years to repay and the total interest incurred would come up to RM3,740! The calculation above is with condition where there's no add-on to the present balance. Sound scary isn't it?
It's really not wise to involve credit card debts in your life!