Credit card can be a source of joy or misery depending on what is the time frame and the occasion. Credit card can save the day if you forgot to bring any cash to pay for your petrol or if you are in a hurry and do not have the luxury of time to queue up at the cashier. Or if you are travelling overseas, the well established credit card company can help you avoid the hassle of shopping.
In a different perspective, credit card company can make your life miserable with their phone calls, reminder and warning lettter and last but not least lawyer's love letter. Some management
seminars that I have attended advised participants to cut up their credit cards whilst others encourage the memberships of all the credit cards being offered at supermarkets and five foot paths of KL in order to get the free gifts or as a form of "insurance" for the rainy days.
The interest rate of credit card is 18% per annum as compared to 6.75% per annum for basic lending rate (BLR) and 3-4% per annum for bank fixed deposit. Some people have calculated that since credit card interest is based on daily balance, the actual interest rate could be a lot higher than 18% per year.
Read Pak Lah answer to a written question in the Dewan rakyat by DAP member for Bukit Bendera.
Credit card bankrupts on the rise
by Pauline Puah
KUALA LUMPUR: A total of 6,405 credit cardholders were declared bankrupt in the last four years, Finance Minister Datuk Seri Abdullah Ahmad Badawi said yesterday. In a written reply to Liew Chin Tong (Bukit Bendera-DAP), he said 1,397 cardholders were made bankrupts in 2004, 1,479 in 2005, 1,656 in 2006 and 1,873 last year. Abdullah said out of a total of RM23.3 billion in credit card debts, RM20.8 billion (89.3%) was current, RM2 billion (8.4%) was unpaid for a period of not more than three months, and only 2.3% (RM500 million) was categorised as non-performing loans, as the debts were outstanding for more than three months. He said credit card debt was not at a critical level, as it accounted for only 3.5% of the total bank financing as at end-February. The non-performing loan portion was under control and had decreased to 2.3% from 16.1% in 1998, he added. Abdullah said statistics on credit card payment showed that from July to December last year, 30% of the holders cleared their debt in full monthly, while 60% of credit card spending was settled in full the following month. “Nearly half of the credit cardholders paid the minimum amount on time and carry the balance forward,” he said. Abdullah said that out of 5,566,871 credit card applications received by the issuers last year, only 2,764,085 or 49.7% were approved.
