Today, I used the rebate points in one of my credit cards to buy two pairs of short pants.

Last time, I would spend and collect credit card points. When I have accumulated enough points, I would browse through the bank’s rewards catalogue and choose items to redeem. Often times, I had to choose items which I do not really need from the limited choices available.

When rebate cards and cash back cards hit the town, I was glad and quickly got myself a couple of these cards. The rebates I earn could be used to pay for anything I buy from selected merchants. Today, I bought two pairs of shorts. The point I want to highlight is, I can choose any items I need from the merchants’ stores instead of browsing through the bank’s rewards catalogue.

Cash back cards are even better. These credits are credited into the account and reduce the amount outstanding on the card. This is as good as giving cash back to me.

When my colleagues and I go for lunch together, they usually want me to pay for the bill first and reimburse me with cash when we return to the office. I don’t know why they prefer to do this. But it works out in my favor because I earn credits from paying for these lunches.

On July 19th, I received a text message from HSBC that read like this, “Save more with HSBC credit card! Just for you, get 10% rebate up to RM30 (per customer) on your monthly total spend. Offer till Oct 31st. T&C apply.” I was pleased with HSBC’s generosity. Before month end, I had charged RM239.85 to my HSBC card.

My statement came in August and I couldn’t find my RM23.99 rebate. I called up customer service and was told the rebate will be credited to my account in November. I was further told that since there are 3 months in total (August, September and October) I have a maximum RM90 rebate to be earned.

I was a little disappointed. I had assumed the rebate period would start from July. It’s my mistake for not finding out the commencement date. If I had known earlier then I would have charged my RM239.85 on another card which would have earned me a rebate of RM1.20 plus cash voucher of RM15.

Instead of getting a rebate of RM23.99 I had lost RM16.20. This experience has taught me to be more careful in the future.

We should all check and reconcile our bank and credit card statements every month. You’ll be surprised how financially rewarding this habit is.

Double charges and Over charges
It is not uncommon to find that you are being double charged by the retailer for a single transaction. This could be due to untrained staff processing your payment.

Unfair charges
Sometimes banks charges unfairly. Below is an excerpt of current month credit card statement. The bank reimbursed me a total of RM20.07. The finance charge of RM0.79 shouldn’t have been charged.

The bank overcharged me in the previous month and reimbursed me this month.

As for the RM19.28, an internet retailer fraudulently charged my card. And when I complained the retailer canceled the transactions and refunded my account. Instead of using the same exchange rate to process the charge and the refund, the bank used different exchange rates which resulted in me incurring foreign exchange losses. I reasoned with the bank and the bank accepted my explanation and reimbursed me the foreign exchange losses.

Don’t take for granted that the bank is always right. Banks want to keep us as their customers and if our demand is not unreasonable then the banks will usually comply. Foster this habit of checking and reconciling your bank and credit card statements and you will see how all these reimbursements add up quickly.

Some credit cards now offer 0% balance transfer from other cards to induce you to apply their cards. You can also find these offers extended to current credit card holders from time to time. Should you use this 0% balance transfer? Personally I believe the 0% balance transfer is a double-edged sword.

The Good
Not long ago, I was heavily in credit card debt and I needed about one year to pay off the balances. I used the 0% balance transfer facility offered by one of my cards, and when needed I will apply for new cards with 0% balance transfer promotion. I paid down my balances aggressively before the interest free period was over. I cancelled some of these cards after paying off the balances. I would have paid no less than RM3,000 in credit card interest charges alone if I had not used the 0% balance transfer facilities.

The Bad
Some people play the 0% balance transfer game. These people would withdraw cash from their credit cards at 0% interest rate. Then they would invest the money to generate a return on their investment. At the end of the interest free period they pay off the credit card balance and pocket the returns as profits.

It is never a good idea to play the 0% game because there is always risks when you invest. You could invest in risk free assets such as certificate of deposits, but then the hassle of managing your cash flow and your balances outweighs the low returns you would get.

Many people uses the 0% balance transfer as a revolving credit. Instead of paying off the balance, they keep transferring the balance from one card to another. However, sometimes people get unlucky and due to circumstances beyond their control (eg. accident, loss of job) they may miss paying one of the installments. And when this happens, usually your interest free period ends, all your balances become due and you will be charged high interest.

In the end, there is no right or wrong in how you use the 0% balance transfer facility. It is only a matter of managing and balancing the risks and benefits you would get from doing so.

“The mother misses and yearn to see her daughter who is married to overseas. The son, wanting to see the mother’s wish come true, took a cash advance on his credit card to finance the trip for his mother and himself to visit the daughter.”

This is a TV commercial from a bank promoting its credit cards. After watching this commercial, I will never seek advice on wealth management, money management, investment products and retirement planning. There are 2 issues highlighting the lack of financial savvy of this bank.

The first is, why take a cash advance to pay for the trip? Airlines and almost all merchants now accept credit cards. He could have charged all these expenses to his credit card. By taking a cash advance, he is charged interest immediately besides the processing fee.

The second is, getting oneself into debt by going for a vacation that one could not afford only shows poor financial knowledge and skills. The bank, in recommending a lifestyle of “spend now, pay later”, isn’t putting the financial well-being of its customers as priority. Instead, the bank is putting its own profits as priority and is only concerned with how much it can earn off its customers.

Banks have a social responsibility towards the public by increasing our financial knowledge and fostering responsible money habits. I suppose banks are not doing this because if we become financial savvy, then the banks will have a harder time earning money off us via processing fees, late fees, exorbitant interest charges, management fees, advisory fees among others.

Remember this saying, “What is good for the person selling you the financial products or services may be bad for the client buying it and vice versa.”