How to Refinance Credit Card Debt in Malaysia?

Key Takeaways

• Refinance credit card involves consolidating your existing credit card debts into one account with a lower interest rate.

• Refinancing is beneficial if you have a high credit score, can make consistent on-time payments, and can choose an option without excessive fees.

• Balance transfers and debt consolidation are popular ways to refinance credit card debt.

Are you feeling overwhelmed by high-interest credit card debt in Malaysia? You can refinance credit card debt to regain control of your financial health!

In this guide, we explore the various refinancing options available to you, helping you to understand how each one works and which might be the best fit for your circumstances.

What Is Credit Card Refinancing?

Credit card refinancing in Malaysia is a strategic financial move that involves consolidating all of your existing credit card debts into one single account.

The goal here isn’t just simplification, though; it’s also about reducing the total interest you’re paying.

By consolidating debts into an account with a lower interest rate, you can save on the interest that accumulates each month.

This method not only makes your financial management easier but also helps alleviate the burden of high-interest charges, giving you a clearer path to paying off your debt.

Should You Refinance Your Credit Card Debt in Malaysia?

Refinancing your credit card debt in Malaysia can be a smart move to strengthen your financial position, but it largely depends on your personal financial circumstances.

Here’s a breakdown of when it might be advisable to refinance credit card debt and when it might not be the best route forward:

1. When to Refinance Credit Card Debt

Refinancing could be a viable option if you:

a. Can Make Consistent On-Time Payments

Being able to maintain regular payments is crucial when you refinance, as it builds your credit score and avoids penalties.

b. Have a High Credit Score

By having a high credit score, borrowers are usually qualified for the best interest rates, making refinancing more beneficial.

c. Can Choose an Option Without Excessive Fees

It’s important to look for a refinancing option that doesn’t erode your savings with high fees. This means comparing different offers and understanding all associated costs.

2. When to Not Refinance Credit Card Debt

On the other hand, refinancing might not be ideal if you:

a. Have Difficulty Making Monthly Payments

If you’re already struggling to keep up with your payments, refinancing could further complicate your financial situation unless it significantly lowers your payments.

b. Cannot Pay Off a 0% Balance Transfer Card Before the Introductory Period Ends

If the refinanced balance can’t be cleared within the introductory period, you might face high interest rates thereafter, which can negate the benefits of refinancing.

c. Have a Low Credit Score

With a lower credit score, you might not be able to secure favourable refinancing terms, which could result in less beneficial interest rates and terms.

3. Alternatives to Refinancing Credit Card Debt

If refinancing credit card debt doesn’t seem feasible or suitable for your situation, consider exploring other debt relief strategies such as:

a. Debt Management Programmes

The AKPK’s Debt Management Programme (DMP), for example, can help borrowers consolidate their debts with lower interest rates.

b. Debt Settlement

This involves negotiating with creditors to pay a lump sum that is less than the full amount owed, potentially reducing your debt load significantly.

c. Credit Counselling

Consulting with a credit counsellor can provide you with personalised advice and plans to manage your debt effectively.

d. Loan Agencies

Loan agencies in Malaysia, such as Citywide Advisory, are financial institutions dedicated to assisting borrowers in finding and applying for refinance loans that suit their needs.

We streamline the process by resubmitting your application to enhance your chances of approval and potentially secure a larger loan amount.

How to Refinance Credit Card Debt in Malaysia?

Refinancing credit card debt in Malaysia can provide a much-needed respite from high interest rates and scattered payments.

The two most common methods to refinance credit card debt are through balance transfers and debt consolidation. Here’s how each option works:  

1. Balance Transfer

A balance transfer involves moving your existing credit card debt to another with a lower interest rate, often 0% APR, for a promotional period typically lasting 12 to 18 months.

Here’s how to effectively use a balance transfer to refinance credit card debt:

a. Look for Low or No Transfer Fees

While many cards have 0% APR on balance transfers, they might also charge a fee for the transfer, usually between 3% and 5% of the transferred amount.

Calculate whether the fee is outweighed by the interest savings.

b. Avoid New Purchases

It’s important to avoid making new purchases with the balance transfer card, as they do not qualify for the 0% introductory rate and may begin to accrue interest right away.

c. Plan Your Payments

To maximise the benefit, plan to pay off a significant portion or all of your transferred balance during the low-interest period to avoid facing high APRs once it ends.

2. Debt Consolidation

Debt consolidation enables borrowers to merge multiple debts into a single account, often at a reduced average interest rate. It simplifies their monthly payments, potentially saving them money on interest.

Here’s what to consider with debt consolidation:

a. Assess Interest Rates

Ensure that the consolidated loan offers a lower average interest rate than your existing debts. It’s not just about simplifying payments — the financial benefit arises from lower interest costs.

b. Credit Considerations

If your credit rating isn’t strong, you might find it challenging to obtain favourable terms on a consolidation loan.

In some cases, the interest rates on consolidation loans might be as high as or higher than your current rates.

c. Financial Discipline

Consolidating debt doesn’t mean the debt goes away; it just manages it more efficiently. Maintain financial discipline by avoiding accruing more debt and focusing on paying down the consolidation loan.

Both balance transfers and debt consolidation can be effective strategies to refinance credit card debt in Malaysia, but they require careful planning and discipline.

It’s best to assess your financial circumstances, review the terms and conditions of each option, and select the method that aligns best with your financial objectives and capabilities.

Refinance Credit Card Debt vs Debt Consolidation in Malaysia

When you’re looking to streamline your finances in Malaysia, credit card refinancing and debt consolidation are viable strategies to reduce your monthly payments and overall interest.

However, choosing between the two depends on your specific financial needs and the conditions you can secure.

1. Credit Card Refinancing

Credit card refinancing typically involves negotiating a lower interest rate with your bank or transferring the balance to a new card that offers a more favourable rate.

The main goal here is to make your monthly payments more manageable by lowering the interest rate you pay on your debt.

2. Debt Consolidation

Debt consolidation, on the other hand, entails taking out a new personal loan to pay off multiple credit card balances.

This strategy consolidates your various debts into a single loan with one monthly payment, typically at a lower interest rate than the combined rates of your credit cards.

3. How to Choose Between Refinance Credit Card Debt vs Debt Consolidation

The decision between refinancing and consolidating debt should be based on:

a. Interest Rates and Fees

Compare the potential new interest rates and any fees associated with transferring balances or originating new loans.

b. Financial Situation

Consider your credit score, which affects your eligibility for low interest rates, and your financial stability, which impacts your ability to keep up with a consolidated loan’s payment schedule.

Citywide Advisory’ Loan and Consultancy Services

Citywide Advisory is a trusted bank loan and debt consolidation agency in Malaysia, offering an array of financial solutions, including:

• Personal loan services

• SME loan services

• Mortgage loan services (to purchase a new home, refinancing and cashback purposes)

• Collateral loan services

We also provide tailored loan advice customised to your individual circumstances, considering a variety of factors like:

• Required loan amount.

• Urgency of the need.

• Property ownership duration.

• Income level.

• CTOS score, including credit score and history.

Personalised Loan Consultancy Services in Malaysia

Citywide Advisory is the BEST loan advisory service in Malaysia.

Citywide Advisory also offers personalized loan consultancy services, helping clients understand and improve their rejected loan applications for refinancing housing loans and more.

We customise our loan recommendations based on an individual’s needs, considering factors like:

• 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).

Our goal is simple: to help you find the right loan solution, paving the way to financial stability and debt freedom.

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