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Definition of balance transfer

Alvin Lim — Mon, 04 Jan 2010 01:08:30 +0000

A bank agent called me few days ago to introduce the bank’s new balance transfer program. I do have a rough understanding of what balance transfer means, but figure that I might as well do a bit of research and post it here.

Definition of balance transfer (source: CreditWeb):

A balance transfer is an option offered by many credit card issuers which enables the card holder to use their available credit from one card to pay off the balances due on one or more other cards. Usually the interest rate on the amount borrowed is lower than the rate of the cards that are being paid off by the balance transfer.

I actually rejected the offer since I don’t have any balance left in my credit card statement and I only have 1 credit card with that bank. So it kinda defeat the purpose of using a balance transfer. Also, it does not make much sense to use it if you know how to control your spending and spend within your limit. No late payment, no interest charges. You can choose to consider balance transfer if the other credit card offers zero annual fee… but in times like this, that’s pretty unlikely since you will most probably cancel off your unused credit cards…. and forced to pay the annual fees for the remaining 1 or 2. I’m sure in 2010, the banks will do their best to attract more credit card applicants and waiving the annual fees can be one of the best attractions

Anyway, I must be honest with you all that when it comes to balance transfer, I’m pretty bad with it since I’ve never used it. So far, I’ve been quite disciplined and managed to pay off my balance every month (not much anyway) so I rarely get hit by the interest rate… thus no point for balance transfer.

Yes, balance transfer has its advantages and disadvantages. But if you know how to control your spending and how to pay off the balance on time EVERY MONTH, then I really don’t see a need to use it. So in the end, it drills down to one thing – controlling your spending.

Fixed Deposit (FD) rates of banks in Malaysia (August 09)

Alvin Lim — Mon, 24 Aug 2009 01:00:58 +0000

In March, I wrote a post on the Fixed Deposit rates of the major banks in Malaysia HERE. Not much change since then. Here’s the update for the month of August 2009.

Bank	1 month	3 months	6 months	9 months	12 months
Affin Bank	2.00	2.10	2.20	2.30	2.50
Alliance Bank	2.00	2.00	2.00	2.00	2.50
AmBank	2.00	2.10	2.20	2.20	2.50
Bangkok Bank	2.00	2.05	2.10	2.20	2.50
CIMB Bank	2.00	2.10	2.10	2.10	2.50
Citibank	2.00	2.00	2.00	2.00	2.50
EON Bank	2.00	2.00	2.00	2.00	2.50
Hong Leong Bank	2.00	2.00	2.00	2.00	2.50
HSBC Bank Malaysia	2.00	2.00	2.00	2.00	2.50
Maybank	2.00	2.10	2.10	2.10	2.50
OCBC Bank (M)	2.00	2.00	2.00	2.00	2.50
Public Bank	2.00	2.10	2.10	2.10	2.50
RHB Bank	2.00	2.00	2.00	2.00	2.50
Standard Chartered Bank (M)	2.00	2.00	2.00	2.00	2.50
The Bank of Nova Scotia	2.00	2.00	2.00	2.00	2.50
The Royal Bank of Scotland	2.00	2.00	2.00	2.00	2.50
United Overseas Bank (M)	2.00	2.00	2.00	2.00	2.50

There’s not much change to the interest rates of most banks. Most of them have the standard 2.0% for 1-11 months, and 2.50% for 12 months FD. The good thing is major banks like CIMB, Maybank, Public Bank and Ambank are giving pretty good FD rates as compared to the international banks. Most of our accounts are in there anyway. And if you are looking to invest for anything less than a year, I guess the best is Affin even though it is not as accessible as other local banks (not as many branches around).

Hope it helps.

Is it still worth it to put your money into Fixed Deposits?

Alvin Lim — Tue, 10 Mar 2009 01:11:49 +0000

In my recent post about Fixed Deposit (FD) rates in Malaysia, I couldn’t help but noticed that the rates are pretty similar from one bank to the other. All of them have very very low rates ranging from 2% to 2.5%.

So for example, you put in RM 5000, which is the minimum required for a 1 month FD placement. At an interest rate of 2%, you will only get RM 8.33 ( RM 100 / 12 ) per month. Quite pathetic. One can easily generate that much income if he or she is hardworking enough to write online articles.

Our FD interest rates are looking like this nowadays

That is why I don’t suggest people to invest in FD unless it’s their emergency fund (which you can withdraw easily and without penalty). For those who have extra money on their hands, try look into unit trusts since most of them are very cheap now but I would suggest you to look into bond and not equity. The equity market will only recover towards the end of 2009 or 2010 (my prediction), and that is quite a longggg time from now.

If you’re not interested in that, take a look at some defensive stocks such as Public Bank, F & N, Telekom Malaysia (TM) and others. These companies give a steady dividend yield to the shareholders and most of them are at a very attractive price now (TM is trading at a PE ratio of 4 – 5 while Public Bank’s PE is around 7 – . However, as with most investments nowadays, you must be willing to hold on for at least 1 year.

To conclude, if given a choice, I will not put my extra money into FD anymore due to the extremely pathetic interest rate. It’ll be better to put into unit trusts or defensive stocks. Or if you know about government bonds, then try to invest in those.

Hope it helps.

Fixed Deposit (FD) rates of banks in Malaysia (March 09)

Alvin Lim — Mon, 02 Mar 2009 01:54:13 +0000

In January, I posted a post on the Fixed Deposit rates of the major banks in Malaysia HERE. Since then, our Bank Negara (Central Bank) has reduced the interest rates twice. Thus the changes are quite major.

Bank	1 month	3 months	6 months	9 months	12 months
Affin Bank	2.00	2.10	2.20	2.30	2.50
Alliance Bank	2.00	2.00	1.90	1.90	2.50
AmBank	2.00	2.10	2.20	2.25	2.50
Bangkok Bank	2.50	2.55	2.60	2.70	3.00
Bank of China (M)	3.00	3.00	3.05	3.05	3.50
Bank of Tokyo-Mitsubishi (M)	3.00	3.00	3.00	3.00	3.70
CIMB Bank	2.00	2.00	2.00	2.00	2.50
Citibank	2.00	2.00	2.00	2.00	2.50
Deutsche Bank (M)	3.00	3.00	3.00	3.00	3.50
EON Bank	2.50	2.50	2.50	2.50	3.00
Hong Leong Bank	2.00	2.00	2.00	2.00	2.50
HSBC Bank Malaysia	2.00	2.00	2.00	2.00	2.50
Maybank	2.00	2.10	2.10	2.10	2.50
OCBC Bank (M)	2.00	2.00	2.00	2.00	2.50
Public Bank	2.00	2.10	2.10	2.10	2.50
RHB Bank	2.00	2.00	2.00	2.00	2.50
Standard Chartered Bank (M)	2.00	2.00	2.00	2.00	2.50
The Bank of Nova Scotia	2.00	2.00	2.00	2.00	2.50
The Royal Bank of Scotland	2.00	2.00	2.00	2.00	2.50
United Overseas Bank (M)	2.00	2.00	2.00	2.00	2.50

NOTE: Those highlighted in BLUE might not be the latest rates since there’s no update since the last BLR cut. As for those in RED, I couldn’t find out about the rates at all from the Internet. If you’re interested in those banks, it’s better for you to call them up and ask.

As you can see here, the interest rates are really really really low. It’s no longer worth it to keep our money in FD and I think that is exactly what are government is trying to do – to prevent us from saving up, and encourage us to spend. This is quite a risky move and it might backfire.

For me, I will only keep my emergency fund in FD while majority of my investments will be in unit trust and stock market. The % is just too low to be kept in FD. Our inflation rate is actually higher than that.

Malaysia’s economy is not good at all

Alvin Lim — Tue, 03 Feb 2009 01:22:48 +0000

I went back to my hometown Kluang for Chinese New Year break and I’ve noticed a lot of businesses were doing rather badly…even during CNY season. People are cutting down on their spending (not the rich ones of course, since they’re still buying posh cars, properties, etc). My neighbor who is a fish monger, told us that business this year has been very bad since most people would rather buy chicken or other meats and cut down on seafood.

Maybe we can change this to Malaysia Economy...but what about the IMF? Change to?

Even the wife, who is a hair stylist, told us that the number of customers have been reduced by 50% at least.

My dad’s friend (another person), who owns a factory, told us that he has to retrench 20% of his foreign workers because of bad economy. The number of orders have also been greatly reduced.

Well, at least, that factory fares better than some others who are forced to close down, thus increasing the number of jobless people.

I do expect our country to be badly hit somewhere in May or June 2009. Whether we like it or not, and whether our government and central bank like it or not……there are just too many things which we cannot really control – such as the closing down of those factories by the multinational companies. Unless our government can come out with $$ to support those jobless people…otherwise, we might just end up like what happened to US now – people don’t have money to pay back the debts/loans.

That’s why I am really afraid of investing anything in banking stocks. It’s just too risky for me. My speculation might be wrong but well…better be safe than sorry.

Fixed Deposit (FD) rates of banks in Malaysia (Jan 09)

Alvin Lim — Mon, 12 Jan 2009 01:09:39 +0000

I’ve posted 2 articles on the Fixed Deposit (FD) rates of the banks in Malaysia before – Fixed Deposit rates of different local banks and List of Fixed Deposit rates for foreign banks.

I figure that this topic is quite important so I’ve decided to continue posting updates on the FD rates of the banks in Malaysia. From now onwards, I will come out with an update of list of FD rates at least once in every 2 months. I will also post an update if there’s any significant changes made by Bank Negara such as lowering the Base Lending Rate (BLR).

Bank	1 month	3 months	6 months	9 months	12 months
Affin Bank	3.00	3.05	3.15	3.20	3.50
Alliance Bank	3.10	3.15	3.15	3.20	3.50
AmBank	3.00	3.15	3.25	3.30	3.50
Bangkok Bank	3.20	3.30	3.40	3.50	3.75
Bank of China (M)	3.00	3.00	3.05	3.05	3.50
Bank of Tokyo-Mitsubishi (M)	3.00	3.00	3.00	3.00	3.70
CIMB Bank	3.00	3.10	3.30	3.30	3.50
Citibank	3.00	3.00	3.10	3.15	3.50
Deutsche Bank (M)	3.00	3.00	3.00	3.00	3.50
EON Bank	3.00	3.00	3.15	3.20	3.50
Hong Leong Bank	3.00	3.00	3.10	3.40	3.50
HSBC Bank Malaysia	3.00	3.00	3.00	3.00	3.50
Maybank	3.00	3.20	3.40	3.50	3.70
OCBC Bank (M)	3.00	3.05	3.10	3.10	3.50
Public Bank	3.00	3.00	3.10	3.10	3.50
RHB Bank	3.10	3.10	3.15	3.15	3.50
Standard Chartered Bank (M)	3.00	3.00	3.00	3.00	3.50
The Bank of Nova Scotia	3.00	3.00	3.10	3.10	3.50
The Royal Bank of Scotland	3.00	3.00	3.00	3.00	3.50
United Overseas Bank (M)	3.00	3.00	3.00	3.00	3.50

NOTE: Those highlighted in BLUE might not be the latest rates because I’m not able to access their web sites properly. The above interest rates have been obtained from other sources. Also, the rates above might change anytime so if you want to know the actual interest rates, it is better to consult the respective banks directly.

Hope it helps. I’ll come out with an updated list 2 months later.