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How You Can Avoid Credit Card Debt

One of the main advantages of owning a credit card is that you have access to additional funds apart from your savings. This can be advantageous in cases of emergency medical expenses, or if you want to make a significant purchase.

It can also work against you if you don’t exercise control on your spending habits. Credit card debt can put your financial security at risk, largely due to the compounding interest rate. Debt among Malaysian youth has reached RM36.9 billion, with many struggling to pay off even the minimum amount each month. Here are 5 ways to help ensure that you don’t find yourself submerged in debt.

Think Before You Swipe

A very common practice is to use credit cards to buy things that we cannot afford. Overspending and failing to have a comprehensive repayment plan can result in you paying a high rate of interest. Remember, if you cannot purchase an item with cash, it is very unlikely that you will be able to pay off the credit debt.

  • Tips
    • Do not use your card against items that you cannot afford.
    • If you need to make a big ticket purchase, take stock of your finances and have a feasible repayment plan ready.

    Don’t Take Cash Advances Using Your Credit Card

    Taking cash advance on your card will incur a high rate of interest. Most banks charge a transaction fee in addition to the interest and do not offer a grace period. All these factors make repayment difficult.

  • Tips
    • Create a fund which you can use during emergencies instead of taking cash advances.
    • Try to withdraw cash using your debit card.

    Limit the Number of Cards You Own

    It is easy to fall into the trap of having multiple cards. Even if you monitor your spending habits, remember that a credit card is a paid service. Keeping track of multiple cards and payments can be difficult.

  • Tips
    • Do not have more than 1 or 2 cards.
    • If you have incurred debt on multiple cards, focus on paying off those with a higher interest rate first.

    Recognise the Signs of Debt

    Most of us do not notice the early signs of debt until it’s too late. Unable to pay your full balance on monthly basis and missing payment deadline indicates that you are heading towards debt. While coming up with a concrete plan to pay off the outstanding amount, remember to first focus on cards with high interest rates.

  • Tips
    • Pay the balance in full each month rather than paying just the minimum amount due.
    • Make timely payments to avoid late fees and the default rate specified in your agreement.
    • Read the terms and conditions in detail before you start using the card.

    Work Out a Budget

    If you have started accumulating debt, it is very important that you organise your finances. Work out a budget by taking into account your expenses and debt repayment. Adopt a disciplined attitude towards making regular payments and ensure that you stick to a time frame to pay off the debt.

  • Tips
    • If you have savings in the form of a fixed deposit, use it to pay your credit debt.
    • Cut back on unnecessary expenses and keep a tab on your monthly expenses.


    Paying close attention to your expenses and making timely payments will help you avoid debt and maintain a healthy credit score. Opt for a card that fetches maximum rewards as per your spending pattern to help balance the cost of owning a credit card. If you are a frequent traveller, apply for a travel card that offers air miles, insurance and other benefits. You can compare the different credit cards available in Malaysia to choose one that works best for you.

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