New Scam of Credit Card Balance Transfer

There seems to be a new scam going on for quite some time and I think some of us may already heard of it before. However, I wish to share it here so that more people will be aware of it.

This is how the scam works. Normally, they will call you and introduced themselves as an outsource company that do balance transfer on behalf of all banks in Malaysia. Their way of doing balance transfer is different than the normal balance transfer. The normal balance transfer requires you to transfer your balance to another credit card issued by another bank. The balance transfer offered by this company do balance transfer on the same credit card itself. This means that you are able to do balance transfer using your own card and repay the balance with interest back to the bank without the hassle of transferring it to another bank.

This plan is said to help you pay off your credit card debts at lower rate. Below are the rates that this plan offers:-

CIMB - 14% p.a. (at least 24 months)
EON - 13% p.a. (at least 36 months)
HSBC, CITI, HLBB AND MORE - approx 14.5% p.a. (at least 24-38 months)

This is how the actual plan really works:-

1. They apply as merchant that can apply for 0% installment schemes from all banks so that they are registered as merchant of all banks.
2. Then, they swipe your card of the amount of your balance transfer plus the interest that they charged.
3. Then, they will apply the 0% installment for the transaction so that the bank will charge you monthly installment.
4. They gain the interest that they charged you.

Even though it seems like you do not lose anything but this doesn't seems legal and you should report to Bank Negara Malaysia if you are approached with such plan. Just make sure you act and think carefully and in your search for lower interest rate for your credit card debt.