Key Takeaways
- What is considered high credit card debt in Malaysia is generally defined as having balances exceeding 30% of your total credit limit across all cards.
- Struggling to pay more than the minimum amount due each month is a sign that your debt may be becoming unmanageable.
- Consistently carrying balances and accruing interest can significantly increase the overall cost of your debt.
- The debt situation can exacerbate when you juggle multiple credit cards with high balances.
- Responsible credit card usage, budgeting, and prompt repayment of balances are crucial to avoiding excessive debt.
Do you ever pay attention to what is considered high credit card debt in Malaysia? It’s a question that plagues many individuals struggling with mounting balances and financial burdens.
Credit card debts can easily get out of control, leading to a cycle of minimum payments, accruing interest charges, and potential damage to one’s credit score.
In this article, we’ll explore the factors that define high credit card debt and provide insights into managing and mitigating this financial challenge.
The Basics of Credit Card Debt
To start, let’s understand what a credit card is. Credit cards allow you to borrow money each month as long as you stay within your credit limit.
If you don’t pay off your entire balance before the next billing cycle, you’ll accumulate credit card debt.
The carried-over balance accrues interest, and missing payments or paying less than the minimum due incurs late fees.
Read More: What are the Types of Mortgage Professionals in Malaysia
What is Considered High Credit Card Debt in Malaysia
So, how exactly can you gauge the level of credit card debt? It’s important to recognise the signs so that you can plan your financials better. Here are some elements you should pay attention to:
1. Credit Utilisation
If your total balance exceeds 30% of your credit limit, you may be in too much debt. Anything between 11% and 30% is generally considered acceptable.
Ideally, it is advisable to settle any outstanding credit card balances before the due date. This way, you can still receive your credit card rewards while avoiding paying interest.
2. Monthly Repayment Burden
High credit card debt becomes concerning when your monthly repayments significantly strain your budget.
If you find yourself struggling to pay off the minimum amount due each month, it’s a sign that your debt may be too high.
3. Interest Accumulation
Credit card interest rates in Malaysia can be relatively high, with a yearly rate of 18%. If you’re consistently carrying a balance and accruing interest, it’s a red flag.
Hence, always aim to pay off your credit card balance favourably in full each month in order to avoid interest charges.
4. Multiple Cards with High Balances
Owning multiple credit cards with high balances on each can quickly escalate your debt.
If you’re juggling multiple cards and struggling to manage payments, it’s time to reassess your debt situation.
Loan Solutions for High-Commitment Clients
If you’re facing high credit card debt and struggling with multiple financial commitments, it may be advisable to seek professional assistance from agencies such as Bluebricks.
Situations like high credit usage (exceeding 70% of your total credit limit), a high Debt Service Ratio (DSR) exceeding 60%, or a combination of various debts can quickly become overwhelming.
In such cases, it’s recommended to explore loan solutions that can help consolidate your debts and reduce your monthly financial burden.
Debt consolidation loans is combining multiple debts into a single loan with possibly lower interest rates and more manageable repayment terms.
Additionally, loan refinancing or restructuring can be an effective solution for those with existing loans.
However, it’s important to note that CCRIS and CTOS records will reflect any changes in loan status due to rescheduling or restructuring.
Specifically, a ‘C’ indicates rescheduling, while a ‘T’ signifies restructuring.
By rescheduling or restructuring your loans, you may be able to negotiate lower interest rates, extend the repayment period, or adjust the terms to align with your current financial situation, ultimately reducing your monthly instalments.
Read More: Business Investment Tips Malaysia: 5 Essential Steps to Consider When Refinancing for Business
Bluebricks’ Loan and Consultancy Services
Bluebricks can work closely with you to develop a personalised plan that brings you into line with your financial goals and helps you achieve lasting financial stability.
We understand the burden of high credit card debt and its potential impact on your financial well-being. Our team is dedicated to helping you find effective solutions to manage your debt and regain control of your finances.
Bluebricks is a bank loan and debt consolidation agency in Malaysia, offering services like:
- Personal loan services
- SME loan services
- Mortgage loan services (for buying a new home, refinancing and cashback purposes)
- Collateral loan services
Additionally, Bluebricks provides a loan consultancy service, leveraging expertise to recommend suitable loan products based on your specific circumstances, such as:
- Your income level.
- Your CTOS score (such as your credit score and credit history).
- The specific loan amount you require.
- The urgency with which the loan amount is needed.
- Your or your parent’s property ownership that has been held for ten years.
Why Bluebricks
1. One of the Top 10 Leading Loan Agencies in Malaysia
Our loan agents represent both individuals and businesses, offering technical financial advice to help secure loan approvals. Even if banks have previously rejected you, we provide access to a broad spectrum of loan options. Our aim is to enhance the success rate of your loan applications and minimise rejections.
2. Over 10 Years of Experience
With over a decade of experience and current banking knowledge, we excel in securing personal, business, mortgage, and collateral loans, navigating challenges like CTOS/CCRIS, and guiding clients confidently towards successful loan approvals.
3. One-Stop Solution
We provide a one-stop loan service, compiling various options from banks and credit institutions for you. Simply submit your income statement, assets, liabilities, employment record, and credit history, and we’ll handle the collateral and documentation to streamline your loan approval process.
4. Full Financing with 100% Bank Loans
We ensure 100% bank loan availability to provide full financial support, making it easier to achieve your goals and build a positive credit history.
5. No Upfront Payment Required
Our no upfront payment policy is designed to ease your financial journey, allowing you to start your investment without initial costs, reducing immediate burden and demonstrating our commitment to your satisfaction and trust.
