CONSUMER CREDIT

EXAMPLE 1

What would be the annual payment for a RM 20,000, 10 year CIMB personal loan at 7%?
= RM 20,000 / 7.024 (present value annuity)
= RM 2847.38

EXAMPLE 2

Mr. Abu owns Visa Platinum Credit Card issued by bank ALIANTE. The billing period for this
month starting from 22 July to 21 August 2021. The interest rate is charged at 18 percent per
annum and the bank requires standard 5 percent for monthly minimum payment. The account
transaction statement is stated below:

Transaction Date Description of transactions (RM)

22-Jul-21 Opening Balance 1250
22-Jul-21 LONPAC Auto Insurance 960
28-Jul-21 Parkson-Setia Mall Shah Alam 250
31-Jul-21 Aliexpress.com London 120
2-Aug-21 Payment 2000
3-Aug-21 QQ Baby Store Seri Kembangan 180
7-Aug-21 Lazada Kuala Lumpur 130
16-Aug-21 Alesmo Perodua Auto Technician 580
19-Aug-21 Lazada Kuala Lumpur - Refund 130
20-Aug-21 Sport Direct Petaling Jaya 370
20-Aug-21 SOGO Kuala Lumpur 2720
21-Aug-21 AXA Affin Medical Insurance 220

Using average daily balance method (including current purchase), assist Mr Abu to
calculate the following:
i) Average daily balance
ii) Interest amount
iii) Outstanding balance
iv) Minimum payment, and
v) Outstanding balance after minimum payment using average daily balance method

ANSWER:

PERIOD NO. OF BALANCE AGGREGATE

DAY BALANCE
 TOTAL

i) Average daily balance =

ii) Interest amount =
iii) Outstanding balance=
iv) Minimum payment =
v) Outstanding balance after minimum payment using average daily balance method.

EXAMPLE 3

Encik Sulaiman Al Ayubi received his credit card statement for the period beginning 15 Aug to
14 September 2021. The details of the statement are stated below.
Date Transactions
Aug 15 Opening balance RM 5,500
Aug 16 Giant Hypermarket RM 420
Aug 17 PetronasPrimax 95 RM 100
Aug 20 Payment RM 2,000
Aug 22 Firefly return ticket to Langkawi RM 300
Aug 30 Dockers Levis RM 400
Sept 5 Tupai-tupaiRestoran RM 380
Sept 13 PetronasPrimax 95 RM 100

Using average daily balance method including current purchases, compute the following:
i) Average daily balance
ii) Total interest charge
iii) Amount of outstanding balance
iv) Minimum payment
v) Outstanding payment after minimum payment
Assume that the interest charged is 18% per annum on the unpaid balance and minimum
payment required is 5%

Answer:
 PERIOD/DATE NO. OF DAYS BALANCE AGGREGATE
BALANCE

i) Average daily balance = total aggregate balance

No. Of days in the month
=

ii) Total interest charge = monthly interest rate x average daily balance
= 1.5% x

iii) Amount of outstanding balance =

iv) Minimum payment = % of minimum payment x total outstanding balance

=

v) Outstanding balance after minimum payment =

a) State any three (3) examples of financial missteps with credit cards and consumer loans.
(5 marks)
i) Make late payment
ii) Pay more than 15 percent of disposable income toward non-mortgage debt
payments
iii) Spend lavishly and thinking that you only need to pay the minimum amount.
You will end up with accumulated debts.