Can You Use Your EPF Savings To Repay Credit Card Debts?
The government has yet to make a decision on whether to allow contributors to use their Employees Provident Fund (EPF) savings to repay credit card debts, following senator Datuk Goonasakaren Raman’s question at the Dewan Rakyat.
According to Deputy Finance Minister Datuk Chua Tee Yong, the principle of EPF as a social security organisation was to provide retirement savings for members.
“A contribution in EPF Account 2, which is in pre-retirement category can be withdrawn only for specific purposes such as health, housing and education.
“If there is demand to withdraw EPF savings for another purpose, we are worried it will affect a sufficient amount (of the fund) for their retirement,” said Chua in reply to Goonasakaren.
Contributors and their employer contribute a combined 23% of the contributor’s salary to EPF, 70% of which was contributed to Account 1, while another 30% was put into Account 2.
Additionally, the Credit Counselling and Debt Management Agency (AKPK) was formed by the government to help those who are having financial management problems by providing advice and structure a suitable repayment plan for their debts, said Chua.
More than 141, 000 borrowers registered and were assisted by AKPK’s debt management programme, as of September this year, added the deputy minister.
Most people have the misconception that credit card application was easily approved by the banks, but according to statistics, the approval for such application was between 40% and 50%.
This was in line with the regulations and conditions set by Bank Negara Malaysia, added Chua, which takes into account the total income of an individual and the number of credit cards requested.
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