Key Takeaways
- Late credit card payment bear far-reaching repercussions, affecting not only financial, but also mental and emotional well-being.
- Credit bureaus, such as CCRIS and CTOS, track an individual’s credit behaviour, and late payments will leave a negative mark on their credit records.
- Cardholders must be aware of the grace period of their specific credit cards to plan and make their payments on time.
Late credit card payment in Malaysia are a predicament many consumers face, yet few fully understand the ramifications and solutions available.
In this comprehensive guide, we’ll explore the consequences of late payments and actionable advice to help you avoid common pitfalls.
Whether you’re grappling with late credit card payments or looking to improve your financial management, we help you navigate the impacts and steps to avoid late payments.
What is Late Credit Card Payment in Malaysia
Essentially, a late credit card payment occurs when a cardholder fails to meet the minimum payment requirement or settles the total outstanding balance by the due date indicated on their credit card statement.
This failure to adhere to the payment schedule set forth by the credit card issuer constitutes a breach of the cardholder’s financial obligations.
The issue of late payments is not confined to a specific demographic; it spans various socioeconomic groups in Malaysia.
The reasons behind late payments are as diverse as the population affected by them. For some, it might be a tight financial month that pushes essential payments down the list.
For others, it could be a simple oversight, such as lacking awareness or forgetting the due date amidst a busy schedule. More distressing causes like sudden medical emergencies or unexpected job loss also contribute to this issue.
What is the Grace Period for Credit Cards in Malaysia?
The grace period represents a critical window of opportunity. It is the timeframe after the statement date during which cardholders can settle their dues without incurring any late fees or additional interest charges.
In Malaysia, this period typically extends to about 20 days from the statement date, although this can vary among credit card issuers.
Cardholders must be fully aware of the grace period their specific credit card offers and plan their payments accordingly to avoid slipping into the late payment territory.
Read More: Personal Loan No Credit Check Malaysia: How to Get One
What are the Consequences of Late Credit Card Payments in Malaysia
Late credit card payments can set off a cascade of adverse effects, some immediate and others that unfold over time.
Below, we dive into the various consequences of delayed credit card payments in Malaysia.
1. Credit Score Damage
Credit bureaus like the Central Credit Reference Information System (CCRIS) and CTOS in Malaysia track your credit behaviour, including late payments.
Your credit score is akin to your reputation, and even a single late payment can tarnish this score, signalling potential lenders that you might be a high-risk borrower.
This negative mark can linger on your credit report for 12 months, undermining your chances of securing loans, favourable mortgage terms, and competitive interest rates.
It’s also crucial to understand that the credit card issuer, particularly if it’s the same institution where your savings account is located, might take specific measures against you.
For instance, let’s say you have a credit card with Bank A and have not made any payments for several months.
Bank A then reserves the right to freeze your RHB savings account in order to settle the outstanding payments.
2. Reduced Financial Flexibility
With a compromised credit history and damaged credit score, banks and other financial institutions may impose stiffer conditions on loans.
For example, higher interest rates, lower credit limits, or, in some cases, outright denials.
This reduced borrowing capacity can thwart significant life milestones, such as purchasing a home or investing in higher education.
3. Late Payment Fees and Additional Interest Charges
Apart from the initial late fee, compounded interest on your outstanding balances can escalate rapidly in Malaysia.
Credit card interest rates are notably steep, and when combined with subsequent late fees, the financial burden can swiftly become overwhelming.
4. Compound Interest Effects
The principle of compound interest means that unpaid balances don’t just sit idle; they grow at an exponential rate.
This can ensnare you in a relentless cycle of debt that is challenging to break, especially if multiple credit cards are involved.
5. Potential Legal Actions by Creditors
When late payments become a pattern, creditors in Malaysia may resort to legal action, which may involve litigation or the engagement of debt collection agencies.
These legal proceedings can further compound your financial woes with potential legal fees and court costs, not to mention the emotional and psychological toll.
6. Loss of Credit Card Benefits
Late payments may lead to the forfeiture of rewards points, cashback offers, and promotional interest rates, which may deprive you of potential savings.
Moreover, promotional interest rates offered to new cardholders may be revoked, leading to higher costs for outstanding balances.
7. Stress and Mental Health Impact
The strain of mounting debt and the looming threat of financial instability can significantly impact your mental health.
The constant stress and anxiety associated with managing a precarious financial situation can seep into personal relationships, professional life, and overall well-being.
Read More: AKPK Credit Card Debt Malaysia: How to Manage Your Debt
How to Avoid Late Credit Card Payments in Malaysia
Here are some practical strategies to ensure timely payments and keep your financial life on track in Malaysia:
1. Set Up Automated Payments
One of the most effective ways to avoid late payments is to automate them.
Most banks in Malaysia offer an online banking feature that allows you to set up automatic deductions for your credit card bills.
This ensures that the minimum payment or full statement balance is settled before the due date each month, eliminating the risk of forgetfulness or oversight.
2. Monitor Spending and Budgeting
Tracking your expenditures is key to ensuring you always have sufficient funds to cover your credit card payments.
Plus, you can create a budget with a dedicated portion for credit card payments to prevent overspending in other categories.
3. Use Payment Apps or Services
Leverage technology to stay on top of your payments by using mobile payment apps or services.
These tools often come with helpful features like bill reminders and the ability to schedule payments.
Some apps also allow you to link your credit card accounts directly, providing timely notifications to ensure you never miss a due date.
4. Make Payments in Advance
Whenever possible, make your credit card payments well before the due date.
Schedule your payments a few days in advance to ensure they are processed on time, especially when using online banking or third-party services, which may experience processing delays.
5. Prioritise High-Interest Balances
For those juggling multiple credit cards, it’s wise to prioritise paying off the balances with the highest interest rates first.
Allocating extra funds to these high-interest balances can be a strategic move in your debt repayment plan.
This approach not only reduces the amount of interest you’ll pay over time but also helps in clearing your debt more swiftly.
6. Communicate with Issuers
Communication is key when facing financial difficulties. If you foresee a problem making an upcoming payment, reach out to your credit card issuer promptly.
Many issuers in Malaysia are willing to discuss alternative arrangements or offer hardship programmes designed to assist customers in managing their payments more effectively.
7. Review Statements Regularly
Make it a habit to review your credit card statements each month to identify any discrepancies, fraudulent transactions, or unauthorised charges early.
This can help you address any issues to avoid delays in payment processing.
8. Educate Yourself on Terms and Conditions
Familiarise yourself with your credit card agreement’s terms and conditions, including the grace period, late payment fees, and applicable interest rates.
Understanding and being well-informed about these details empowers you to make decisions that align with your financial well-being and avoid unnecessary penalties.
Read More: How to Get Larger Personal Loan Malaysia with Credit Scores
Why Bluebricks
1. One of the Top 10 Leading Loan Agencies in Malaysia
Our loan agents represent both individuals and businesses, offering technical and 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.
Stay on Top of Late Credit Card Payments with Bluebricks
Bluebricks can help you proactively settle your late credit card payments. With a thorough assessment of your financial situation and goals, our experts can guide you and safeguard your financial health.
As a reputable bank loan and debt consolidation agency, we provide the following services:
- Personal loan services
- SME loan services
- Mortgage loan services (for buying a new home, refinancing and cashback purposes)
- Collateral loan services
Professional Loan Consultancy Services
Our specialised consultants are well-versed in the nuances of credit card debt, the practices of credit card companies, and the relevant regulations.
This enables them to give our clients essential advice and strategies to effectively manage late credit card payments.
Keeping in mind your unique needs and circumstances, we consider the following factors:
- The specific loan amount you require.
- The urgency with which the loan amount is needed.
- Whether you or your parents own a property that has been held for over ten years.
- Your income level.
- Your CTOS score (such as your credit score and credit history).
Late Credit Card Payment – FAQs
Late credit card payments in Malaysia are a multifaceted issue influenced by a variety of factors.
By understanding what constitutes a late payment and utilising the grace period wisely, cardholders can navigate their credit card payments more effectively, avoiding the pitfalls of late payments.
In Malaysia, a late payment record can remain on your credit report for a minimum of 12 months for CTOS and CCRIS.
Credit bureaus like CCRIS and CTOS track your credit behaviour, and negative marks such as late payments can impact your creditworthiness.
Typically, no. The late payment will remain on your credit report until it drops off naturally (12 months for CTOS and CCRIS).
The first step to rebuilding your credit record is to clear your credit card debt as soon as possible and avoid additional late payments.
However, if you have any payment that has been mistakenly marked as late, you can raise a dispute and include documents to support your claim.
No, unfortunately, individuals with bad credit scores, typically defined as scores lower than 550, face significant challenges in applying for bank loans. It’s crucial to settle off the bad credit first before attempting to apply for bank loans.
Bad credit encompasses various issues beyond just late payments, including instances of rescheduled or restructured loans, Special Attention Accounts (SAA), and trade references. Until these issues are resolved and the credit score improves, access to bank loans remains limited.
