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Credit Restructuring Program (CRP) |
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Let's Do It! |
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----------------------------------------------------------------------------------------- Eliminating Credit Card Debt in 12-36 months Starts Here.....................
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Few notes on credit card usage in Malaysia. Your debt can be increased tremendously
if you are not well aware of the power a. More than 40% credit card users out of the 8.8 million credit card holders only
manage to pay the minimum 5% of their outstanding balance. b. Credit card defaulters accounted RM 700 mil of the RM 18.6 billion in non performing
loans. c. Any unpaid credit card loan, the annualise percentage rate is 19.7% d. 7,456 people had enrolled into Debt Management Programme under Credit Counselling
and Debt Management Agency (AKPK). e. 31% from those people got into financial problem because of credit card. f. 52% faced financial trouble because the combination of hire purchase, housing
loan and credit card debts. You can read the full report from The Star Online : Easy Credit, Easy Spending Easy credit, easy spending
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A Finance Ministry official says the number of those who only manage to pay the minimum 5% of their
outstanding balance has increased significantly beyond last year’s statistics of 40% of the 8.8 million credit card
holders.
Despite the Government's reminders to be more selective in issuing credit cards, banks have instead
become more aggressive in signing up more clients.
And they are coming out with “innovative” ways of getting new clients. Among these are
free gifts to those who sign up; “mandatory” credit cards for purchasers of certain car models; and a cheque for
a sum of money in one’s name. In other instances, gold cardholders are given a status boost with platinum cards and
higher credit limits.
The reason is simple – credit cards offer the most lucrative form of business to banks, with
an interest fixed at 18% per annum.
And it's simple arithmetic – the less one pays of the outstanding credit balance, the more money
a bank makes.
Many credit card holders face credit that has snowballed to an uncontrollable amount, resulting in
their not being able to service the debt at all.
The Treasury intervened last year when it was revealed that credit card defaulters accounted for RM700mil
of the RM18.6bil in non-performing loans.
“Many credit card holder pay only the minimum 5% of their monthly balances. This means they have
to pay a 1.5 % monthly interest on the remaining balance and this can cause the outstanding figure to balloon,” said
a senior Treasury official.
Last year, Bank Negara deputy governor Datuk Mohd Razif Abdul Kadir asked banks to study spending trends
that showed early signs of financial mismanagement to put the lid on spiralling bad debts.
He proposed that such cardholders be referred to the Credit Counselling and Debt Management Agency
for counselling.
So why have banks not acted to stem the credit tide? The answer is becoming clearer as credit card
debts continue to mount.
The Treasury official, who was asked the question, had this to say:
“There are already complaints of too many regulations in the banking industry. We must remember
that this is a free market.
“It is also the cardholder’s responsibility to handle his finances properly. Banks can
give you 100 credit cards for all they want. Ultimately it is the credit cardholder who must be disciplined and responsible
with his expenditure.”
Drawing an analogy on the dangers of smoking, the official said: “Cigarettes are on sale everywhere.
Does that mean that everybody will become a smoker? Does it mean that the sale of cigarettes be banned?”
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