No Ban On Credit Card Interest Charges

No Ban On Credit Card Interest Charges

The government has no intention on abolishing the interest charge on credit cards as doing so could leave card holders in long-term debt.

Deputy Finance Minister Datuk Othman Aziz cleared the air after a question was posed in Parliament on if the country had any plans to follow in the footsteps of the United Kingdom after they imposed a ban on credit card interest charges this year.

He said Bank Negara Malaysia (BNM) has taken preventive measures to ensure people are not in debt long-term since 2006.

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Such efforts included hiking up the minimum annual salary eligibility from RM18,000 to RM24,000, and passing a consumer credit law in a bid to govern credit supply and protect its consumers.

Othman added the chances of bankruptcy due to credit cards were still low with 1,598 (0.04%) of credit card holders declared as bankrupt for high debts at the end of last year.

“The reduction or even abolishment of interest charges on credit cards as implemented in the UK will not necessarily benefit the country’s economy.

“Instead it will promote a habit of non-prudence and indiscipline among credit card holders,” he said.

He said those struggling to pay their credit card debts can seek help from agencies such as the Credit Counselling and Debt Management Agency (AKPK), as many had already turned to their management debt programme for help.

[Source]

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