Financial Planning with ASB, OD and Credit Card – Part 3
Here we go…Part 3 of Financial Planning with ASB, OD and Credit Card. In Part 2, I had explained how ASB and OD would help you to save some money instead of invest in ASB only. So in this Part 3, I will show one of the method that can be applied by using Credit Card together with ASB and OD. Remember about the first polls? CC scored top for making us headache. But maybe after you read this, you might think different about CC…read through this post to find the answer.
For this part, I’ll use the same example as Part 2. So as example, let’s say,
*Credit card debt/outstanding balance is RM5,000
*Apply personal loan RM10,000
Method 3 (ASB + OD + CC)
Apply personal loan RM10,000, debit into ASB, convert to Certificate, and apply for OD. Then settle credit card debt (RM5000) from cash in OD.
*Pay for interest = 3,400
OD (Interest = BLR = 6.75% per annum):
*Pay credit card from your OD. OD outstanding balance = 10,000 – 5,000 = 5,000
*Date 1st, debit total income (husband & wife) 3,000 into OD account.
*Date 1st until 20th, use Credit Card for your daily expenses (RM3000).
*Date 21st, pay amount CC used by OD (RM3000)
*Date 1st, repeat the same every month
Interest calculation for 1 month
1st-20th : Outstanding balance = (-5000) + 3000 = (-2000)
: Daily interest = 0.37
: Total interest (1st~20th) = 7.40
21st-30th: Outstanding balance = (-2000) – 3000 = (-5000)
: Daily interest = 0.92
: Total interest (21st~30th) = 9.25
*Total interest OD for 1 month = 16.64
*Repeat this for 5yrs. Total interest after 5 yrs = 998.40
Why Credit Card? Most of Credit Card has 20 day of interest free period. So between 1st until 20th of each month, you spends using CC, while keep total of your income in OD account to reduce outstanding balance…which means to reduce interest. Then on 21st, payÂ all amount that you used with CC within the 20 days to avoid any interest charges by CC.
If you compare with Part 2, total OD’s interest for 1 monthÂ has reduced from 21.08 to 16.64. For 5 yrs, its become 998.40 instead of 1294.9. Do you see how its work?
Note: Sample above is not a guide for you to follow, but just an example to explain how these tools can be used to help you financial.
Keyword: perancangan kewangan, overdraft rhb, od asb, asb od, bebas hutang