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4 Reasons Why Managing Your Credit Card Is Important!

Managing your credit cards responsibly can be quite a daunting task. There are billing cycles to keep track of, cashback and reward points, monitoring your statement for any fraudulent activity and not to mention analyzing your own spending habits. This can be made even more complicated if you’re juggling between multiple credit cards. However, credit card management should not be taken lightly as if mishandled, it can lead to some serious financial problems in the future.


Let’s take a look at 4 reasons why it is important to manage your credit card.


1. Avoiding paying for late fees

If you end up paying your credit card bills late, you will be charged late payment fees. The late payment fees vary between banks however it is usually a minimum of RM10 or 1% of your outstanding balance (up to a maximum of RM100), whichever is higher. You will continue to be charged each day until the balance you owe is fully paid. For some, these late payment charges may not seem like much but if you’re habitual about making late payments on your credit cards, these unnecessary costs will add up in the long run.


According to Bank Negara, credit card debt is a growing issue especially amongst young Malaysians, with 47% of them having high credit card debts. This indicates that about half of the Malaysian youth are not managing their credit cards responsibly and are getting burdened with debt that is otherwise avoidable.


A great way to ensure that you are on top of your credit card bills is by using the Finory app. Finory will give you a total of 3 reminders to pay your credit card bills and will also indicate the amount due to ensure that you never miss a payment. The app makes it especially helpful if you own multiple credit cards as it can get tricky to keep track of multiple billing cycles.


2. Maintaining a good credit score

Credit cards work as an alternative to cash but they also serve another important purpose ‒ evidence of your credit score. However, not keeping track of your credit card bills and making late payments can be detrimental to your credit score. In Malaysia, CCRIS (Central Credit Reference Information System) is the central system that stores information on your credit history. Banks use CCRIS data to assess your credit risk when you apply for loans as it gives them an idea of your creditworthiness. Good credit scores could mean better credit terms, which is why it is important to stay on top of your credit card expenses.


Another aspect that can affect your credit score is your credit utilization rate. The credit utilization rate compares your credit card balance against the available credit limit. A high credit utilization rate can mean that you’re spending a significant part of your monthly income on debt payments, which can be bad for your credit score.


As a rule of thumb, it’s good to keep your credit card utilization rate below 30% to ensure that you maintain a good credit score. Finory makes this easy to track by calculating the credit utilization rate of your combined credit limits for you. The app will also indicate whether your current credit utilization rate is at an appropriate level, making it easier for you to know if you're maintaining a good credit score.


3. Enjoying cashback and reward points

One of the biggest perks of owning a credit card is enjoying the cashback and reward points it offers. Cashback refers to the cash rebates you can get from using your credit card while reward points allow you to redeem points on things like gift vouchers and air miles. If your credit card offers these benefits and you’re unfamiliar with how to maximize this, you could be missing out on a valuable opportunity to save money.


Most cashback credit cards offer between 1%-5% rebates on purchases. You can think of this as a 1-5% discount on the item you’re paying for however the cashback is only credited to your account at the end of your billing cycle. It is also important to consider the conditions of receiving said cashback such as the maximum limit of monthly cashback and if there is any minimum spending required.


Finory contains a ‘cashback tracker’ that summarizes information about your credit card’s cashback features, making it easier for you to fully utilize these benefits. For example, the cashback tracker displays the estimated cashback available as well as the cashback period for each of your credit cards.


4. Insight on spending habits

Keeping tabs on your credit card expenses can give you a better insight into your spending habits and whether you are being financially prudent. Taking the time to analyze your credit card statements and reviewing the transactions listed will help you see where most of your hard-earned money goes. Perhaps there were purchases you made during the month that were either unnecessary or exceeded your budget. Taking a step back to evaluate these choices can help you plan for the longer term and put you in a better position of achieving your financial goals.


The Finory app simplifies this process by tracking your spending habits through your credit card statements. The app categorizes your expenditures into different buckets so that you are able to get a better idea of what you’re spending on and re-examine whether you need to cut back on any of these items. Finory also displays your credit card expenses on a monthly basis so that you’re able to see the overall trend in your spending, saving you some time from having to manually do it on your own.


Start managing your personal finance from your credit card

Credit cards usually have a reputation for encouraging cardholders to spend more and beyond their personal budgets. Most recently, we’ve seen this belief reaffirmed as Malaysian youth have started to experience the drawbacks of accumulating credit card debt. However, if managed carefully, credit cards can save users a lot of money and offer various opportunities to achieve financial wellbeing. In some cases, credit card holders can even earn money just by using their credit cards. Thus, it is important to maintain control of your credit card expenses and understand how to manage them best so that you are able to use this helpful financial tool to your advantage.

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