Get Smart - Get Away From MBF Get Smart Balance Transfer
Anyone interested to borrow RM7,000 for 39 months and pay a total interest of RM4,095? Surprisingly, some would. Welcome to the latest credit card balance transfer promotion by MBF.
The re-run of the free TV promotion by MBF to say the least, is mind boggling! The earlier campaign called “The Big Deal” ended in March 2007 offers a free 29 inches flat TV. As reviewed in earlier post, that big deal was rather a dumb deal - any one with a primary mathematics skill would quickly figure out how bad that deal was. The question therefore is why MBF is running a similar scheme again which now called ‘Get Smart.’ The true is, sadly, we aren’t getting any smart! Because if we are, MBF won’t be running such scheme again. There must be a demand for such a deal!
The Get Smart promotion primary objective is to acquire new members who are currently not owning MBF credit card. From June to September MBF hopes to sign on 80,000 new card member. The free TV also covers frequent card usage contest and easy payment scheme. All together, MBF is looking to generate RM61 million turnovers.
How it works
A Samsung 37″ LCD TV is given ‘free’ by transferring a minimum of RM7,500 and by maintaining a outstanding balance of RM7,000 for the next 39 months. But what not stated in the press advertisement are 1) If the outstanding balance dips below RM7,000 during these 39 months, a full retail price of the TV set at RM5,499 would be charged. 2)The cardholders have to maintain the RM7,000 min balance while at the same time, meet the monthly 5% minimum payment. MBF will send a SMS reminder should the balance drops below RM7,000 and give you a ‘grace’ period of 10 days to top it up.
The caveat
You may want to read above conditions again and think for awhile of its implications.
I must give it to MBF - it brave enough to come out such a scheme that not only pulled you into the credit card debt quick sand, but also squeeze every single cents from you before you were dead and buried. Essentially the 5% minimum payment & RM7,000 balance requirement means you have to continue to use the card despite it already carries a huge outstanding balance in which you are not allowed to pay off.
By my calculation, one would have to charge a minimum RM368.42 per month in-order to avoid the RM5,499 penalty. Of that amount, RM150 is for the 18% p.a. for the 7,000 outstanding balance. Total interest pay would be RM4,095. However, along the way, 39 months to be precise, it would easily end up owning more than RM7,000.
Oh, did I tell you that free LCD TV has a high 800 to 1 contrast ratio? But that probably does not matters at all! No amount of sharpness would show you the true picture, the invisible cost that is not obvious and apparent - by carrying a huge credit card outstanding balance for more than 3 years, that is enough to put a back mark on anyone’s credit record. Think about its implications!
Bottom line
What ever you do, be smart, get away from MBF Get Smart credit card balance transfer.
Explore Other Options
For those interested on credit card balance transfer, always shop around. Forget about any ‘free gift’, instead, try to look those that can help you to settle debt rather than prolong it. Find one that offers lowest interest rate / special promote rate and if the payment period is inadequate or too short for , try a series of transfer one after another and stay discipline to pay-off the debt within the period. Also very important, stop using that card after the balance transfer - this is because any payment made to the card first goes to interest due if any, follow by the balance transfer that carries low promote rate, and lastly to last month charges (higher interest rate at 18% p.a). This is the ‘pay-the-lowest-interest’ payment order. If you keep using the card, those current month charges will start to accumulate and ballooning at 18% p.a.
P/s: For comparison purpose, here are the MBF Jan - Mar’07 “Big Deal” credit card balance transfer detail: Minimum transfer amount is RM5,000; maintain a minimum balance of RM4,500 for 12 months - RM1,000 penalty if failed to do so. Interest rate is 18% p.a. Free gift - a 29 CRT TV worth RM900. True cost to pay = RM810 of interest + RM50 processing fee + low credit rating.
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The balance transfer is just one method. You don’t have to do that to get the TV.
Other method is to do interest free installment, RM100 for 43 month. That’s RM4300 for Samsung 37″ LA37S81BX (HD-Readay, 7000:1 contrast, 2HDMI, etc), will only be available in the Malaysian market (in October for RRP: RM5499. For now same model only available 32″ (RM3899) and 40″ (RM6299).
And if you’re already an MBF cardholder, you get it only for RM3900.
I say it is kind of “Smart”.
Hey, that’s a good observation at first, when I read about the “offer” I wasn’t very impressed either - they tried to do the same thing with their 29″ slim flat TV last time, luckily I saw through it all as I read the fine print and like you, did the math, ugly ugly ugly scenario!
But now, there’s another deal 0% interest for 39 months at RM100 per month, bringing the total up to RM3900. It’s a very simple, straightforward Easy Payment Plan at 0% throughout the entire duration, which I believe makes MORE sense than the ones above.
I read the fine print too, doesn’t mention about maintaining a balance etc. Now that’s a fairer deal don’t you think? And yes, I’m not with MBFCards (as in an employee) I just have their card and never got around to using it… maybe now I will
Here’s the Terms and Condictions to anyone who is interested: http://www.mbfcards.net/_staging3/home.cfm?IncFile=content.cfm&PrimeID=27&ParentID=27&SecID=315
I guess they wisened up after realizing it’s much better to ensure people use their card instead of stowing it away… Now if only they can improve their portal!
Thanks for the article though, really good stuff!
The review covering only the balance transfer part, not the 0% installment. For those interested on the TV but not having MBF card, you could also do it with RHB-SenHeng Card, if you have one. But as always, better buy it in cash - who knows down the road you have some cash crunch and a missed payment will see the bank revoked the 0% installment plan, which a standard terms & conditions