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35 Responses to “Maybank Announcement On RM50 Credit Card and Charge Card Service Tax”

1. alan on November 6th, 2009 at 9:31 am

   Just got a call from a Top foreigner bank.

   She claimed the bank will give complimentary credit card’s Reward Points value RM50 once the RM50 is charged in the statement.

   So indirectly, the Bank is absorbing the RM50 Service Tax on credit cards ! 😀

   We shall wait for official update then

2. Cleo on November 13th, 2009 at 12:32 am

   what u could get for 50 rewards point? even accumulate with other points, i also dont wish to pay that RM50 if possible. Going to cut 1 credit card and 1 charge card, and spare one out for multi purpose use. However, i am thinking to be a sub card under my bro so i could pay only RM25. Money not enuf, so gonna find better way to cope with this crazy announcement.

3. alan on December 9th, 2009 at 11:31 am

   CIMB Group Says RM50 Service Tax On Credit Card Little Disappointing
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   KUALA LUMPUR, Dec 8 (Bernama) — CIMB Group says it has some reservation about the government’s plan to put a RM50 service tax on credit card.

   “We have some reservation because obviously we were hoping that the tax is not necessary because at the end of the day, the idea is to reduce the cash holdings and increase plastic and other forms of payments,” its group chief executive Datuk Seri Nazir Razak said.

   “This is something that we are little bit disappointed but of course, we have to comply,” he told reporters here after a signing ceremony today for a RM50 million term loan facility from CIMB Bank Bhd and UBS AG to JCY HDD Technology Sdn Bhd.

   To promote prudent spending, the government has proposed a RM50 service tax a year on each principal credit card and charge card and a RM25 service tax a year on each supplementary card effective January 1 next year.

   Asked if it is possible for CIMB Bank to absorb the services tax, Nazir said “it is just a matter of economics.”

   The bank is hoping to achieve 1.2 million credit card holders by end of the year from the current 1.1 million customers.

   Malaysian Rating Corporation Bhd (MARC) recently said that the service tax is unlikely to have an impact on the overall transaction value of cardholders over the medium term.

   Cardholders are more likely to cancel extra cards to minimise their tax burden since the tax is proposed to be levied annually on a per card basis, it said.

   MARC also believed that the proposed tax will result in an aversion to applying for multiple cards on the part of new applicants and thus the growth rate of issued credit card will lose momentum from the compounded annual growth rate of 13.2 per cent recorded over 2004-2008.

   As for card issuers, currently comprising 21 banks and three non-bank financial institutions, this tax will have mixed effects depending on their existing market share and brand positioning, it added.

   from:bernama.com/bernama/v5/newsindex.php?id=460940

4. alan on December 9th, 2009 at 9:18 pm

   Are you facing more risks with your personal loans?
   ———————————————————-

   PETALING JAYA: The notion that personal loans are getting riskier with longer tenures amid the current economic climate does not hold water, as much depends on the size of the loan as well as the credit assessment and underwriting of individual banks, analysts said.

   They generally concur that banks have an internal credit assessment system to ensure that the risk of default is minimised.

   Banks would have to look at an individual’s cash-flow position as well as his ability to pay the loan, an analyst from a foreign research house said.

   A senior analyst with an investment bank feels that with the improving economy and uptick in consumer spending next year, consumers would be able to service their loans on time, hence resulting in lower loan defaults or non-performing loans.

   RAM Rating Services Bhd head of financial institution ratings, Promod Dass, reckons the credit risk of personal loans ultimately depends on the credit underwriting of each bank.

   More importantly, he said, the loans should be priced to sufficiently absorb potential defaults.

   HSBC Bank Malaysia Bhd general manager for personal financial services Lim Eng Seong said the repayment period had to be viewed relative to the size of the loan.

   “It cannot be too short, otherwise it will be unreasonable for customers. And it wouldn’t be sensible for banks from a risk perspective if the tenure is too long, especially given that the size of personal loans is usually much smaller than other types of loans,’’ he said in an email reply.

   OCBC Bank (M) Bhd head of credit cards and unsecured lending, Muzir Kassim, said the bank practised a prudent approach to lending, including personal loans, and that through risk-based pricing and scoring models, loan risks were kept to an acceptable minimum level.

   Comparing personal loans and credit cards, Standard Chartered Bank Malaysia Bhd head of consumer transaction banking, Choong Wai Hong, said: “Personal lending products target specific needs such as big purchases, debt consolidation and cashflow funding.”

   “With longer tenures, the burden of paying the interest rate is heavier but the monthly instalment payments instill discipline and predictability in paying down the loan.

   “Credit-card lending, however, may be deceivingly shorter in tenure but the interest rate may be higher, and customers may only elect to pay the minimum 5%.”

   On the outlook for personal loans next year, RAM’s Dass said the rating agency saw greater competition among banks in that segment, particularly loans to government staff via direct salary deductions.

   The intense competition, he added, may drive down yields.

   Given its current low base, Dass said the personal loan segment would grow at least 20% next year in line with RAM’s expectations for gross domestic product (GDP) growth of 4.9% in 2010.

   However, personal loans would remain a small portion of the banking system’s total loans, he said. As at end-September 2009, they accounted for 4.65% of the banking industry’s loans.

   Meanwhile, the RM50 service tax to be imposed on credit cards next year would likely motivate customers to consolidate their card balances and reduce the number of credit cards they carry, according to StanChart Malaysia’s Choong.

   They could do this either through personal lending or transfer the balance to their remaining cards, but it would be cheaper to consolidate through personal lending, he added.

   OCBC’s Muzir said more people would spend in a systematic and structured way via the effective use of personal loans.

   “Consumers appreciate that personal loans provide a cost-effective alternative to other financial tools such as credit cards and overdrafts, representing another choice for managing spending and credit prudently,’’ he noted.

   from:biz.thestar.com.my/news/story.asp?file=/2009/12/9/business/5262536&sec=business

5. alan on December 11th, 2009 at 8:06 pm

   Citibank: Credit card issuance to drop due to service tax
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   CITIBANK Bhd, one of the country’s largest foreign lenders, expects its credit card issuance to drop next year, due to the government’s RM50 service tax on all principal users and RM25 for supplementary cards which comes into effect on January 1.

   Chief executive officer Sanjeev Nanavati said the ruling will not only affect Citibank, but also all other credit card issuing banks.

   “We are the market leader in this industry and we expect the number of credit cards issued at our branches to drop following this ruling,” he said after presenting prizes to “Citibank Big 50 Contest” grand prize winners in Kuala Lumpur yesterday.

   Sanjeev urged the government to consider imposing a one-off RM50 surcharge for credit card users, instead of taxing them on the number of cards being used.

   “At our bank, for example, each customer is issued multiple cards but with the same credit limit. They have different cards to pay for petrol, and shopping as each card offers different incentives.”

   Earlier, Sanjeev and Citibank head of consumer markets, Fabio Fontainha, presented Lu Zen Chai and Ramli Abd Rahman with a Mercedes Benz E200k Elegance each, after winning the grand prize in Citibank Big 50 Contest.

   The contest, which was launched in conjunction with Citibank’s 50th anniversary celebrations in Malaysia, was held from June 1 to August 31 this year and had attracted more than 10 million entries.

   from:btimes.com.my/Current_News/BTIMES/articles/jrcici/Article/

6. alan on December 17th, 2009 at 5:07 pm

   No need to wait for anyone, the Deputy Finance Minister Datuk Chor Chee Heung has there will no change to planned tax on credit cards.

   Just go ahead Cancel your credit cards NOW!

   No change to planned tax on credit cards, says Chor
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   PETALING JAYA: There is no change to the planned RM50 service tax for credit cards from next year, Deputy Finance Minister Datuk Chor Chee Heung said.

   Chor said the RM25 tax for supplementary cards would also be imposed, despite reports stating otherwise.

   �People keep asking me as there is news going around that the supplementary card tax will be abolished,� he said when contacted yesterday.

   Chor added that some banks and finan�cial institutions were indirectly picking up the tab by offering certain promotions.

   �If the banks want to keep their customers, they should offer to pay for their card-holders,� he said.

   Meanwhile, Federation of Malaysian Consumers Associations secretary-general Muhammad Sha�ani Abdullah suggested that one charge be imposed per customer, regardless of the number of cards.

   �We want to encourage prudent spending but at the same time, we do not want people to go further into debt.

   �The banks should also do their part to absorb the cost, instead of expecting AKPK (Credit Management and Debt Management Agency) to do everything,� he added.

   Several banks have posted notices on their websites, informing customers of the guidelines. Some also advised customers not to cancel their cards as they were still waiting for further clarification.

7. alan on December 18th, 2009 at 9:28 pm

   Since Maybank will not be absorbing the RM50 credit-card service tax, do expect other banks to follow this move as well.

   Go ahead cancel your Credit Cards NOW!

   but do it the Right way http://www.alantanblog.com/credit-card/how-to-cancel-a-credit-card-do-it-the-right-way.html

   Maybank not absorbing RM50 credit-card service tax
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   MALAYAN BANKING BHD will not be absorbing the RM50 credit-card service tax as doing so would run counter to the objective of the measure’s introduction under Budget 2010, says the bank’s CEO Datuk Seri Abdul Wahid Omar.

   He said the government had introduced the tax to ensure the public would not be overburdened by high credit levels as the household debt in this region was relatively high.

   “We must observe the spirit of the introduction of the RM50 tax in the first place, which is why the bank will not absorb the cost,” Wahid said at a signing ceremony between Maybank and MoneyTree (M) Sdn Bhd earlier today, for the sponsorship of a year-long financial-literacy programme for youngsters.

   The government had introduced a RM50 service tax for principal card holders and RM25 for supplementary card holders under Budget 2010.

   Wahid said consumers were likely to lower the number of credit cards they signed up for due to the service tax.

   He added that Maybank had a credit-card loyalty programme and the points collected could be used to offset the RM50 tax.

   Wahid said Maybank was also aggressively promoting its debit cards as an alternative to credit cards among it customers.

   Asked if the bank was seeing any reduction in the number of credit-card holders, Lim Hong Tat, Maybank’s head of consumer banking said, “Not much reduction has been seen.” He added that it was “still within control” and that the impact would become clearer in the next few months.

   Lim said Maybank would have two million Visa debit-card holders in the next one or two months, with 101 million transaction per month, while its credit-card base had reached 1.6 million users.

   Meanwhile, on Maybank and MoneyTree’s collaboration, Wahid said the financial-literacy programme would benefit 25,000 youngsters in universities and schools.

   MoneyTree chairman Datuk Nik Kamaruddin Ismail said the company would begin to educate youngster between six and 20 years old on financial literacy and skills to manage personal finances, in January.

   from:theedgemalaysia.com/index.php?option=com_content&task=view&id=155944&Itemid=79

8. How to Avoid to Be a Credit Card Fraud Victim |credit crisis | DISCOVER the Road to Financial FREEDOM! on December 19th, 2009 at 1:08 am

   […] Office Opening Hours | Pos Malaysia – 2,528 viewsPIKOM PC Fair 2009 (III) Is Back – 2,424 viewsMaybank Announcement On RM50 Credit Card and Charge Card Service Tax – 2,187 viewsPost Office Opening Hours For Busy People| Pos Malaysia – 1,875 viewsRM50 Service Tax […]

9. alan on December 21st, 2009 at 9:39 am

   Credit card tax for existing users to start on anniversary date
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   KUALA LUMPUR: Applicants issued with new cre­dit and charge cards next year will have to pay the RM50 service tax upfront.

   For existing card holders, the charge will be im­­posed on the anniversary date of cards.

   Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah, who confirmed this with The Star yesterday, said the Government would impose the service tax for credit and charge cards from next year.

   “Existing cardholders will only be charged the ser­vice tax through their issuing banks upon the aniversary date of the card.

   “For example, if the card’s anniversary date is in January, then you pay the tax in January. But if the date is in April, then you only pay the tax in April,” he added.

   The minister’s clarification puts to rest nagging doubts among the millions of credit card holders in the country who have been raising queries since Prime Minister Datuk Seri Najib Tun Razak an­­nounced the new tax when he unveiled Budget 2010 in October.

   Najib, who is also the Finance Minister, had said that a RM50 service tax for principal credit and charge cards and a RM25 for supplementary cards would be imposed from January.

   This has led to card holders asking if the charges will be imposed from Jan 1 or on the anniversary dates of the cards, which are usually issued for a three-year period.

   Those holding a string of cards were most eager to know before deciding to cancel some of their ac­­counts.

   A check with the customer service departments of several commercial banks showed that they had yet to receive any definite confirmation.

   Some banks said they were still awaiting for a directive from Bank Negara, while others think the tax would be imposed on the anniversary dates.

   A third group of banks has also offered to absorb the tax for the cardholders, on condition a certain amount of money was spent within a certain timeframe.

   Cardholder Y.L. Sim, who called up the bank to cancel his credit card, said the bank advised him “not to be hasty.”

   “The officer said that they had yet to receive a formal directive from Bank Negara (on when to impose the tax). But I was worried as the New Year was nearing,” he said.

   Deputy Finance Minister Datuk Chor Chee Heung, when contacted, advised cardholders to plan accordingly, saying holding two credit cards was enough.

   ““Even I intend to hold only two credit cards,” he added.

   He urged those who had large outstanding credit card debts to stop using the cards and meet the issuing banks to work out a repayment mechanism.

   There are some 11 million credit cards circulating in the country.

   from:thestar.com.my/news/story.asp?file=/2009/12/21/nation/5343737&sec=nation

10. alan on December 22nd, 2009 at 2:25 pm

    When Maybank don’t absorb credit card service tax, other Banks would just follow..

    I’m Totally Not surprise!

    BIMB too won’t absorb credit card service tax
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    It says it has other perks for credit-card holders

    Bank Islam Malaysia Bhd (BIMB) has announced that it will not “cover” the proposed service tax on credit cards, saying it already has enough other incentives for its credit card customers. It is the second bank to annouce this after Malayan Banking Bhd.

    The Government will soon impose a RM50 tax on primary credit cards and RM25 on supplementary credit cards, as announced during the unveiling of Budget 2010.

    A random survey by StarBiz found that banks like Citibank and RHB Bank were also not in favour of covering the tax for their customers.

    Indications are that banks are only willing to waive annual fees (if not already waived) and/or allow customers to use their points collected to help pay for the tax.

    “BIMB has always had annual fee waivers and rebates way before the Government considered implementation of the credit card tax,” Khairul Kamarudin, BIMB’s consumer banking division general manager, told reporters at a prize-giving ceremony at BIMB’s ExtraBagAnza campaign yesterday.

    He said covering the tax would not be in the “spirit of the tax,” which aims to discipline spending among Malaysians.

    “Most banks are not looking to cover this tax, but BIMB on the other hand is providing cash rebates for customers to decide if they want to cover the tax or not,” he said.

    Khairul said BIMB had not experienced any decline in the number of credit card users, but acknowledged that a reduction in credit card applications could happen in the months ahead due to the introduction of the tax.

    He added that BIMB had several products in the pipeline to counteract the problem, with debit cards among the new products.

    Meanwhile, BIMB aims to increase its personal financing portfolio to RM2bil for the financial year ending June 30, 2010, from RM1.5bil previously. To achieve this, Khairul said the bank would execute an aggressive and effective marketing campaign to attract customers.

    He noted that under the bank’s ExtraBagAnza campaign, RM30mil in loans had been disbursed under its Personal Financing-I facility up to Nov 30 from the campaign’s kick-off on Sept 1.

    from:biz.thestar.com.my/news/story.asp?file=/2009/12/22/business/5346077&sec=business

11. raymond on December 22nd, 2009 at 6:22 pm

    I am considering to cancel my credit card because of the new service tax by our goverment. I dont think it is wise for our goverment to impose the service tax due to economic downturn. We also have to pay taxes. Goverment should study or ask the people before implementing any taxes or do something that will affect the economy.

12. alan on December 22nd, 2009 at 9:11 pm

    Unpopular policies not helping senior citizens
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    I REFER to the letter “Seniors expect justice” from Disillusioned Senior Citizen of Penang (The Star, Dec 18).

    I am a senior citizen who also feels greatly aggrieved by the uncaring and illogical policies of the Government.

    Having reached retirement age and progressed to my golden years, I had looked forward to enjoying the fruits of my prudent investments in the stock market and real property.

    But we, the senior citizens, have been suffering the most unkind cuts, one after another, inflicted by a most uncaring Government.

    Firstly, the Government implemented the single-tier tax system for companies, with the result that all dividends paid out by listed companies are now taxed at a flat corporate rate regardless of the tax bracket of the shareholder receiving the dividends.

    The usual tax refunds which I used to be able to claim from Section 110 of the Income Tax Act became no longer available.

    The little savings from the tax refunds were a most welcome addition to our retirement nest egg, but now it is gone.

    Secondly, from Jan 2010, an annual service tax of RM50 will be imposed on all principal credit cards.

    I hold several credit cards, but the reason for doing so is not that I wish to use the maximum cash out from the cards, but rather that many merchants issue special affinity cards with card companies, and these cards actually result in much savings to me from the ongoing promotions.

    Who is the smart-alec officer in the Finance Ministry who advised the minister that the service tax imposed will result in prudent spending?

    Now it seems that I have to forgo some of the savings that I usually enjoy as I have to cancel most of my cards.

    Thirdly, the Real Property Gains Tax (RPGT) is being reintroduced from Jan 2010, albeit in modified form. Now all gains from property are taxed at 5% regardless of the holding period.

    Some of the properties held by me were passed down by probate from my late parents, who acquired them in the 1950s and 60s, at comparatively insignificant ringgit cost by reason of inflation.

    If I dispose of these properties now, the “acquisition cost” would be the original cost to my late parents, so almost the entire sale consideration would be subject to 5% tax.

    Effectively for such properties, the RPGT is a transaction tax on the entire sale consideration. Is this a logical outcome for a tax which was supposedly introduced to curb “speculation”?

    Also, how am I to prove the original acquisition cost and cost of improvements, seeing that all these were transacted decades ago and no documents can be found?

    Is it not an Income Tax Department ruling that accounting records must be kept for only seven years?

    But now it seems that property transaction records must be kept forever, at least until disposal.

    Furthermore, is it fair, just and equitable that such a law be made to apply retrospectively to properties acquired many decades ago?

    Would it be asking too much to ask the powers that be in Putrajaya to rethink these very unpopular policies?

    from:thestar.com.my/news/story.asp?file=/2009/12/22/focus/5347529&sec=focus

13. alan on December 22nd, 2009 at 9:23 pm

    MBF Cards offers savings to card users
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    MBF Cards is offering credit cardholders a balance transfer at 0% interest for 12 months and instant savings of RM1,200 along with subsidised credit card service tax of RM50, effective Jan 1, 2010.

    The credit card issuer said in a release on Dec 21, that its offer would mean cardholders starting the new year with an unlikely proposition of savings, even after expenses incurred during the festive season and the new school term.

    “This is a revolutionary campaign, and possibly the first of its kind in the world,” said MBF Cards senior vice-president Rajjish Verronn. “Balance transfer actually extends into a credit-free facility for one year, allowing card members the flexibility to use, repay partially or in full, and reuse that credit on the card up to the approved balance transfer amount at zero interest.”

    For example, if the balance transfer amount approved under the campaign is RM7,500 and if the card member chooses to settle that card’s outstanding amount in full in the second month, the card member will have the option to utilise and reuse up to RM7,500 on the card at zero interest for the remaining 10 months.

    MBF card members essentially save money when they use the card for daily expenses and to pay bills, the card issuer said in the statement. A convoy of three cars outfitted in vibrant green and the campaign logo is promoting the offer in and around shopping and residential districts of the Klang Valley until end-February 2010.

    from:theedgemalaysia.com/index.php?option=com_content&task=view&id=156071&Itemid=79

14. alan on December 22nd, 2009 at 9:28 pm

    hi raymond,

    You don’t need to cancel now.

    Call your bank ask when is your credit card opening month(anniversary) because the service tax RM50 on that period and not 1st Jan 2010

15. Maybank Latest Official Announcement on the RM50 Service Tax on Credit Card and Charge Card |Credit Card | DISCOVER the Road to Financial FREEDOM! on December 25th, 2009 at 9:36 pm

    […] posts:Maybank Announcement On RM50 Credit Card and Charge Card Service TaxHow to Pay your RM50 Credit Card Service Tax without Paying| UOB Credit CardRM50 Service Tax for […]

16. alan on December 29th, 2009 at 9:36 am

    No tax on debit cards
    ————————-

    Debit and petrol cards do not fall under the purview of the RM50 service tax imposed on credit or charge cards.

    The Association of Banks in Malaysia said other cards not included were closed community charge cards used at workplaces, schools and clubs, as well as loyalty and e-money cards like Touch ’n Go.

    “The service tax will be collected by banks and other card issuers from credit and charge cardholders and paid to the Customs and Excise Director-General.

    “In this respect, the amount of service tax payable will be set out in the cardholders’ monthly statement separately,” it said in a statement yesterday.

    The association added that the tax was chargeable when the credit or charge card was issued, on the anniversary date or upon renewal.

    The tax will not be charged for replacement cards issued in connection with lost or spoilt cards and fraud.

    “Banks and other card issuers are allowed to enter into arrangements where cardholders may apply for redemption or reward points or rebates they earn through using their cards for the payment of the service tax,” it said.

    Member banks and other card issuers will be contacting their cardholders in respect of the imposition.

    Starting Jan 1, there will be a service tax of RM50 a year on each principal credit and charge card, and RM25 on each supplementary card as announced in Budget 2010.

    For enquiries on the service tax on credit or charge cards, contact toll-free hotline ABMConnect at 1-300-88-9980 from Monday to Friday or e-mail banks@abm.org.my.

    from:thestar.com.my/news/story.asp?file=/2009/12/29/nation/5378573&sec=nation

17. alan on December 31st, 2009 at 6:48 pm

    MBF Cards offers RM50 tax waiver for balance transfer
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    MBF card holders stand to receive immediate interest savings upon approval of their balance transfer with a waiver of the RM50 Government Service Tax under MBF Cards’ Power Balance Transfer programme, subject to terms and conditions.

    The offer promotes savings and long-term benefits for principal credit card holders who transfer their credit balance to an MBF card, MBF Cards (M) Sdn Bhd said in a statement.

    The offer is valid until end February next year.

    Under the offer, card members can now transfer their outstanding balance from other credit cards to MBF Cards and enjoy 0% interest for 12 months by maintaining the approved balance transfer amount for a full year.

    But MBF card holders can only enjoy the benefits of the revolving credit amount, capped at RM7,500, with a minimum monthly transaction of RM300.

    In addition, “if the approved balance transfer amount is more than RM7,500, MBF Cards’ prevailing interest rate will apply to the amount in excess of RM7,500,” the company said.

    Meanwhile, Maybank is also providing its cardholders an option with regard to the RM50 card service tax.

    Maybank said its cardholders had been informed via letters as well as on the bank’s website that cardholders could redeem their reward points to pay for the credit card service tax.

    from:biz.thestar.com.my/news/story.asp?file=/2009/12/30/business/5382573&sec=business

18. alan on December 31st, 2009 at 7:02 pm

    Costly cards
    —————–

    Credit card holders need to examine their obligations closely if they do not wish to feel cheated.

    EVERYONE knows that taxes have to be paid on income earned after a certain level. Then there is a tax on goods purchased or services obtained. But who would have thought that tax must be paid for just holding a credit card?

    The imposition of a RM50 service tax on credit and charge cards announced in the last budget is due to come into effect next year, but when exactly this will have to be paid is the question on cardholders’ minds.

    The question also arises as to when exactly is the anniversary date. Is it the date in each year on which the card was issued, or if the card was issued for a three-year period, is it immediately after the end of the three-year period?

    Whatever the decision, it will end with the amount appearing on the statement of the cardholder and if it is not paid, it will become a debt on which interest at the usual exhorbitant rates will apply.

    In many cases of default involving small sums, a cardholder is seldom dragged to court. This is because the legal costs are high and the chances of enforcing the judgment are low. After all, the huge profits made will more than adequately cover any loss in this regard.

    Many cardholders, tempted by the convenience provided by such cards, overlook or grudgingly bear the high cost of holding one.

    Card users also have grievances against merchants who refuse to honour the card either absolutely or on a qualified basis. However, merchants, too, have problems which card users may not appreciate. This has to be understood in the context of the way in which the issue of cards has evolved.

    Before the use of such cards became widespread, the holding of a card was associated with prestige and status. And it was usually used to purchase costly items in high-end places.

    In time, cards were issued to a wider and perhaps not selective range of people. As a consequence, they came to be widely used even for small retail transactions where the profit margins for merchants are small. Abuse and misuse, as well as fraud, also set in.

    This necessitated the need for verification. Before the present electronic means of approval became widely available, merchants would, in the case of unfamiliar customers, take out a printed list to check whether the card had been suspended, cancelled or for any other reason ought not to be entertained.

    In other cases, the merchant would make a phone call to the card issuer for verification. Today, verification has become common and efficient, though not without hiccups.

    Merchant misconduct?

    What about the grievance against merchants who refuse to accept cards for transactions below a certain amount? It is essentially a matter of contract. Any right or remedy would only follow on the basis of any breach of contractual rights that exist.

    When a merchant displays the symbol of a particular card, he is merely intimating that payment by card is possible if and when a contract is entered into. The question of payment only comes into effect when a purchase is made.

    If a merchant makes it known as soon as a customer steps into the establishment that payment by credit card will not be accepted for purchases below a certain amount or for the purchase of specific items, then the merchant commits no wrongdoing.

    However, there could be a contractual breach if the merchant has entered into an unqualified undertaking with the card issuer that payment will be accepted by card for every purchase without any qualification.

    But then the breach would be in relation to the card issuer and not the cardholder. This is because until an offer is made and accepted, there is no contract between the cardholder and the merchant, and the question of payment does not arise.

    Of course, the cardholder can complain to the card issuer if it has given an unqualified undertaking that its cards would be accepted at all establishments without qualification and question. However, this would again depend on the terms and conditions on which the card is issued.

    Finally, there is a need for cardholders to be careful in dealing with card issuers. This is because not all card issuers are always ethical and fair.

    Pitfalls and ethics

    In the recent past, card issuers have issued cards to new and untested customers, waiving the annual charges. Yet existing cardholders continue to be slapped with annual charges even though they have held the card for years.

    Cardholders who complain are quietly given a waiver. Those who do not complain are charged annual fees. Legally this is not wrong but in terms of fairness and ethics, it is hardly a commendable approach.

    There are card issuers who claim to give annual fee waivers but the cardholder must be aware of the need for minimum usage.

    There could be instances where there is an initial annual fee waiver but in the second year, there could be a substantial annual fee which is imposed as soon as the second year starts.

    Cardholders who do not want to feel cheated, need to read carefully the terms and conditions to appreciate their obligations.

    from:thestar.com.my/lifestyle/story.asp?file=/2009/12/29/lifefocus/5354969&sec=lifefocus

19. alan on January 2nd, 2010 at 7:48 pm

    New year, new buzz for EON Bank
    —————————————

    EON Bank Bhd, the country’s third smallest banking group, says loans may grow 14 per cent this year, higher than last year’s 6.2 per cent, amid economic recovery.
    Deposits are expected to grow 20 per cent this year, compared with last year’s 3.1 per cent, as the bank aims to shore up deposits to ensure a healthy cost of funds ratio, EON Bank Group chief executive officer Michael Lor said.

    This year, EON Bank will work to maintain a sustainable return from the consumer and small- and medium-sized enterprise (SME) segments, which comprise about 85 per cent of its business, he added.

    “With our innovative products and services, many of which have been groundbreaking and market-disrupting, we will maintain strong leadership and growth in hire purchase, cards, SME loans and mortgages,” Lor told Business Times in an e-mail interview.

    Among new products next year, the bank will be “causing a lot of buzz” by launching “the ultimate credit card” for those who love to shop, he said.

    It will also focus on deposit products that help customers save and grow wealth, which Lor felt was important in light of the economic situation of the past two years.

    “Our home loans and car loans will also be offering some very exciting promotions,” he added.

    In addition, EON Bank is eyeing new revenue streams from investment banking, advisory, trading and bancassurance, he said.

    On the RM50 service tax imposed on credit cards by the government, Lor, while agreeing that it would affect the industry, stressed that the fundamentals of competition for EON Bank did not change from its intention to offer innovative and pioneering products that deliver on simplicity, convenience and value.

    “In fact, we have received tremendous response to some of our credit cards and promotions over the past year, he said.

    One of its more popular cards is the EON Bank-GSC (Golden Screen Cinemas) Credit Card, which offers discounts, benefits and priority ticketing lanes to holders.

    It also saw great response to the EON Bank-Matta Card, which allows customers to take advantage of vacation packages and savings during the annual Matta (Malaysian Association of Tour and Travel Agents) Fair.

    Overall, EON Bank, whose parent company EON Capital Bhd is now a takeover target of larger rival Hong Leong Bank Bhd, is facing the new year with a renewed sense of vigour and enthusiasm, Lor said.

    “While we recognise that we are a local bank in our origins and presence, we are ultimately looking to be the ‘preferred Malaysian bank’ for our customers.”

    The challenges will come mainly from three areas, Lor added. Banks will need to find ways to survive in an increasingly open and liberal economic landscape and at the same time attract and retain talent.

    They will also need to be quick in adopting cutting-edge technology and world-class standards.

    “I believe a key concern will also be how we can educate and encourage Malaysians to adopt new technology and innovations as well as benchmark themselves against world-class standards.

    “The development and adoption of cutting-edge technology is happening so rapidly. In fact, banks around the world have successfully introduced Internet banking, mobile phone banking and other advanced solutions to their customers. So it is certainly some-thing all of us here in Malaysia are looking into,” Lor said.

    from:btimes.com.my/Current_News/BTIMES/articles/lor01/Article/index_html

20. alan on January 31st, 2010 at 8:13 am

    Banks waging plastic war

    KUALA LUMPUR: With millions of customers pondering if they should snip their credit cards to evade the Government’s newly-introduced RM50 service tax, banks are engaged in a “plastic war” to retain their share of the market.

    Tempting offers are being made to cardholders, in the form of innovative loans, easy cash and balance transfers, to keep them “tied.”

    Bank officials told The Star that the credit card issue was at the top of the agenda during daily meetings.

    “Credit cards offer banks a mass market and it is important that the correct strategies are devised to keep our customers.

    “As it is now, it’s getting super hard to sign up new customers as the market is already saturated,’’ said one bank manager based in a local bank here.

    Another senior bank manager, who declined to be named, said there were banks which were even offering zero-interest balance transfers for up to a year – but with a catch.

    “One bank’s requirement is for the cardholder to spend at least RM300 a month using the credit card. “The cardholder benefits and at the same time, the bank makes money from the additional swipings,’’ he said.

    One cardholder, who wanted to be called Raj, said he was surprised to receive a cheque for RM10,000 in his name recently.

    “The bank wrote to me saying I could use the cash any way I wanted. I was so tempted until I read the fine print which stated that the interest rate was 18%!,’’ he added.

    Writer P.B. Cheong, 30, said he cancelled four credit cards at the start of the year.

    “Once you get caught in the credit circle, it is very hard to get out. It is not how many cards you have that matters but how you use it,” said Cheong who chalked up a debt of RM30,000 at one time.

    Finance manager Angeline Goh, 29, said she received many calls from banks and agents offering credit card balance transfers at a lower interest and even personal loans.

    “It’s normal to apply for one credit card from the bank but they end up offering you two credit cards – a Visa and Mastercard, she said.

    Deputy Finance Minister Datuk Chor Chee Heung, when contacted, said it was understandable that the banks were coming up with more incentives and plans to retain their credit card base.

    He said some banks have created a system with points used to redeem the RM50 service tax.

    Fomca secretary-general Muham-mad Sha’ani Abdullah said banks would offer various “baits” or incentives to retain their customers.

    “Banks should be more prudent as to whom they issue credit cards. Otherwise, they would just be getting people into deeper debt because many do not understand the pitfalls of having a credit card,” he said.

    fr:thestar.com.my/news/story.asp?file=/2010/1/31/nation/5585740&sec=nation

21. alan on January 31st, 2010 at 8:13 am

    No subsidy for RM50 service tax

    PETALING JAYA: Calls to customer care lines of all credit card issuers revealed issuers will not subsidise the RM50 service tax for credit card that came into effect on Jan 1 this year. Most credit card issuers, when contacted, declined to comment on the service tax issue.

    With the exception of Bank Kerjasama Rakyat Malaysia, which unconditionally subsidises the service tax, all credit card issuers impose specific conditions upon customers in order to offset the amount. (see graphic)

    Most credit card issuers allow the amount to be offset with the cardholders’ reward points earned. However, the amount of points required to offset the RM50 is usually lower than a department store shopping voucher redemption of similar value.

    Another mechanism offered is a RM50 cash rebate specifically tackling the service tax amount. It requires cardholders to utilise their cards – usually with a minimum value on transactions – to be entitled to the rebate.

    According to a statement from Aeon Credit Service (M), the company has yet to see any behavioural change in card members after the announcement of the service tax.

    “Our credit card members’ recruitment has not been slowing down and we are still receiving encouraging number of applications despite the fact that new applicants are aware of the service tax imposed.

    “In principle, the service tax is to be paid by cardholder, who may also utilise reward points earned from using the card for the purpose,” the statement said.

    Many credit cardholders have already started cancelling their surplus credit cards.

    In his blog, PJ Utara MP Tony Pua wrote that he made his choice for what to snip and what to keep based on the best cash rebate and reward point deals.

    Cash rebates is better than card reward points, he wrote, but do read the fine print before deciding. Although many credit cards offer “up to” 2% cashback, he noted, “You’ll only enjoy 2% cash back for monthly purchases in excess of say RM6,000. Otherwise, for expenditure below that, you’ll only get cashback of not more than 0.5%.”

    He said to enjoy some cash rebates, card holders may have to forward balances and end up paying high interests.

    For reward points, he advised, look out for the card that offers the least amount of points to convert to a particular reward.

    fr:thestar.com.my/news/story.asp?file=/2010/1/31/nation/5585741&sec=nation

22. alan on March 18th, 2010 at 8:24 pm

    Trends in credit cards after new service tax

    EFFECTIVE Jan 1 this year, credit cardholders are charged an annual service tax of RM50 per principal card and RM25 per supplementary card. The service tax is imposed on any new credit card issued from Jan 1, 2010. For existing cards, the service tax will be charged on the anniversary of card issuance.

    There are diverging views from analysts and bankers on the impact of the new service tax. Some expect the growth of card usage to slow down as cardholders cancel some of their cards. Others think that although the number of cards will shrink, the growth of credit card spending will not be affected.

    Our view is that the service tax will reduce the number of cards in circulation and will have a slight negative impact on the growth of credit card receivables.

    Most banks allow cardholders to use their reward points to offset the annual service tax. Some banks even absorb the service tax if the utilisation of the card hit a certain level within a specified period of time.

    But we think this will not stop the slide in the card base as cardholders cancel cards that they do not use actively as they do not have enough reward points to offset the service tax or meet the utilisation needed to qualify for selected banks’ absorption of the service tax.

    In this report, we look at the growth of the credit card business in January this year after imposition of the service tax. We qualify that it is too early to deduce the full impact of the new tax as some cardholders will be only be cancelling their cards when the renewal time approaches.

    Despite the imposition of the service tax, growth in credit card receivables unexpectedly accelerated to 7.2% year-on-year (y-o-y) in January 2010 from the 5.8% y-o-y pace in November to December 2009. We attribute this to the positive impact of the improved economic climate, which offset the drag from the new service tax.

    The trend in credit card loans, to a large extent, mirrored economic growth but with a three to four-month lag.

    While the one-month numbers may not be reflective of the full impact of the service tax as some existing cardholders will cancel their cards only when the time for renewal draws closer, the improved momentum in January 2010 imbues us with confidence that it will not have a significant negative impact for the full year.

    Furthermore credit card receivables made up only 3.4% of the industry’s loan base in January.

    Despite the improved growth in credit card receivables in January, we still see downside risks in the momentum given the 13%-45% y-o-y contraction in credit card loan approvals between April 2009 and January 2010.

    We still see downside risks for the momentum of credit card loans despite the improvement in January. This is partly premised on the 13%-45% y-o-y pullback in credit limits approved for new credit cards in April 2009-January 2010.

    Credit card loan approvals even slumped 44.8% y-o-y in January, partly due to the slower growth of 10.9% y-o-y for credit card loans disbursed in January versus 20%-35% y-o-y in June-December 2009. In absolute terms, January’s loan approval totalling RM1.08 billion was also the lowest since February 2006. The faster expansion of credit card loans in January despite the contraction in approvals was mainly due to the higher utilisation of existing credit limits.

    However, the continuous drop in credit card approvals will cap the growth of credit card receivables in the longer term.

    As expected, the cards in circulation shrank as cardholders cancelled some of their cards to avoid paying the service tax. Cards in circulation dropped from 11.1 million in November to 10.8 million in December and 10.4 million in January.

    Principal cards fell 6.1% from 9.8 million in November to 9.2 million in January while supplementary cards dropped 7.7% from 1.3 million to 1.2 million.

    Due to the imposition of service tax, cardholders are cancelling some cards and concentrating their usage on a limited number of cards.

    This makes it harder for banks to expand their card base unless they can get new cardholders by offering transfers of credit card balances held with other banks.

    To lure them, banks need to offer better packages including freebies, higher credit balance or better reward points. This suggests more intense competition in the industry and higher cost of acquiring new cardholders.

    A seasonal spike in card usage
    Credit card utilisation jumped in December-January due to increased spending before and during Christmas and Chinese New Year.

    Amounts charged to credit cards shot up to between RM5.6 billion and RM6 billion in December and January compared to RM5.1 billion in November and an average of RM4.9 billion in January-November last year.

    The number of transactions also rose to 24 million and 26 million in December last year and January 2010 versus an average of 22.7 million in the preceding 11 months.

    The seasonality factor also pushed up the utilisation of credit cards (total purchases over the credit limit) to 72%-75% in December and January from an average of 66% in the first 11 months of 2009. We expect credit card purchases to subside to the RM5 billion level after the festive period.

    Benign delinquencies
    Despite last year’s weak economic climate, the asset quality of credit card receivables remained intact. Loans not serviced for more than three months (which technically should have been classified as NPLs) accounted for only 2% of the total credit card receivables in December and January, slightly lower than the year-ago level of 2.1%.

    Credit card loans in arrears for less than three months comprised about 7% of total credit card loans in December 2009 and January 2010, down from 7.9% in December 2008.

    We believe that the annual service tax of RM25-RM50 is too small to have an impact on the asset quality of credit card receivables.

    On a positive note, the improved operating environment amidst the economic recovery should cap the delinquency rates at the end-2009 levels of 2% for more than three months and 7% for less than three months

    fr:theedgemalaysia.com/business-news/161781-trends-in-credit-cards-after-new-service-tax.html

23. alan on April 3rd, 2010 at 10:43 pm

    Credit card issuers eye bigger market share

    NOW that the economy is on the growth track, card issuers appear poised to grow their market share through several initiatives. The assumption is that a growing economy will also push demand for credit cards.

    For the fourth quarter of last year, the economy registered a growth of 4.5%; this year, many analysts are upbeat that it will surpass 5% and some even feel with the stimulus packages coupled with the government’s New Economic Model, it will the pave the way for stronger economic growth.

    RAM Ratings’ head of financial institution ratings Promod Dass says that credit card issuers will probably focus on card holder retention and increasing card utilisation through privilege schemes or special promotions after the imposition of the recent RM50 service tax. “Based on recent trends on the number of principal cards in circulation, we have observed a slight drop in January 2010,” he points out.

    Generally, analysts concur that consumer spending will increase in tandem with the strengthening domestic economy which in turn will spur demand for credit cards despite the tax imposition on cards.

    Malayan Banking Bhd (Maybank) consumer banking head Lim Hong Tat says card members will continue to use credit cards for cashless payments but may confine it to those that meet their needs best.

    While there may be some consolidation of cards per individual as a result of the imposition of service tax, he expects overall card spend to continue growing. In addition, he points out that the increase of credit card adex by 63% post budget announcement will also contribute to promoting the usge of credit cards.

    Citibank Bhd vice-president and business director for cards and consumer lending Anand R. Cavale says the bank will continue to invest in Asia, specifically Malaysia, given the region’s positive outlook.

    “We expect the mass affluent spending in Malaysia and also in the region to pick up amid the stronger economy. The bank will invest across a broad spectrum of cards and one of the main focus will include platinum cards.

    “Platinum cards fit well if we look at how consumers are spending in the bank’s card portfolio and where they will be spending moving forward,” he says.

    Presently, Citibank is the leader in terms of circulation and card spend (sales). As of end 2009, the bank had more than one million card members and a market share of 20% in terms of card spend.

    According to RAM Ratings Banking Bulletin 2010, Citibank was ranked first with credit cards receivables amounting to RM4.53bil as at Sept 30, 2009.

    This was followed by Maybank with RM3.65bil and CIMB Bank with RM2.75bil respectively.

    Citibank, he adds currently has more than 100,000 platinum cardholders and is looking to grow this base by at least 20% to 25% over the next two years. At present, more than 25% of the bank’s credit card sales comes from platinum cards.

    The bank’s key strategy to capture a larger market share, says Anand, revolves around four investment areas – merchants and partners, products, distribution and research on consumer spending.

    He says one of the unique features of Citibank’s platinum card, which has yet to be matched by other players is its high reward points and the ability to redeem the points in all major departmental stores and supermarkets.

    In addition, consumers can purchase items outside the catalogue and still earn high reward points.

    To boost its presence in the card segment, among others, Lim says Maybank has embarked on building long-term relationship and customer loyalty in activation and retention programmes for different customer segments.

    Maybank has also ventured into non-traditional card segment such as greater use of debit cards for small ticket items and corporate cards for high ticket items.

    The demand for the platinum cards remains high because of the premier value associated with these cards.

    Average spend by platinum card members for the bank, says Lim, is higher than Maybank’s Gold Card members.

    To this end, he adds that the bank will continue to look at improving the benefits of its premium cards to increase take-up as well as higher spend by existing cardholders.

    CIMB Bank head of group cards and personal loan division Jean Yap says the bank’s credit card business is focused at providing value to all segments of the consumer market.

    As part of the bank’s credit card business strategy, she says it is continuously identifying and partnering top-tier merchants to provide card members with significant benefits. At present, it features more than 380 merchants in its rewards programme.

    To better service the bank’s fast growing customer base, Yap says the bank began supporting its existing full-fledged credit card service centres located at Menara Bumiputra Commerce and Menara SBB in Kuala Lumpur with additional credit card service kiosks at key shopping malls, including at Pavilion and Sunway Pyramid.

    The bank is also looking to expand its service kiosks in the near future to support its service centres in Penang and Johor Baru, she notes.

    CIMB Group’s key advantage in the card segment, she says, is its regional presence, where it enables CIMB Bank to create value for its customers on a regional scale. Additionally, CIMB credit card customers in Southeast Asia can enjoy seamless cross-border privileges where all discounts and perks can be enjoyed by any card members irrespective of whether you are in Malaysia, Indonesia or Thailand.

    “The bank’s multi-prong strategy has yielded positive results with excellent growth in its overall card spending as well as significant growth in the bank’s affluent customer base through its World and Infinite cards, thus contributing towards making CIMB South-East Asia’s most valued universal bank,” Yap notes.

    In addition to Classic, Gold and Platinum credit cards, CIMB was the first bank in Malaysia to launch the CIMB World MasterCard for the affluent segment.

    Following the successful launch of the CIMB World MasterCard, the bank followed through with the launch of the Visa Infinite, allowing the bank to complete its product range that cuts across all segments in Malaysia, from the mass (Classic and Gold), the mass affluent (Platinum) all the way to the affluent market (World and Infinite).

    Yap says the bank has also identified specific segments where it is able to provide added value through its co-brand partners such as Malaysia Airlines, Petronas, and Touch n’ Go, with each partner bringing distinctive value to specific customer profiles.

    fr:biz.thestar.com.my/news/story.asp?file=/2010/4/3/business/5978415&sec=business

24. alan on April 26th, 2010 at 9:27 pm

    If you do not use credit cards then debit cards maybe a good option..

    ———-
    Banks predict double-digit growth in card base, spending

    Debit cards gain more ground

    PETALING JAYA: Debit cards are fast gaining popularity in the country with banks predicting strong double-digit growth in card base and card spend this year.

    MasterCard Worldwide vice-president and senior country manager for Malaysia and Brunei Jim Cheah said more consumers were using debit cards as the cards allowed them to control their spending and manage their finances better.

    “It also reduces the need to carry cash and minimises loss in the event of theft or robbery,” he added.

    The debit card’s popularity is also partially driven by a change in consumer mindset, where post-financial crisis, many consumers are more careful with credit facilities and instead prefer to spend only what they have as opposed to racking up debt.

    The higher usage of debit cards is also due to their greater acceptance by merchants as a cash replacement alternative as well as the recent introduction of service tax on credit cards.

    Malayan Banking Bhd (Maybank) executive vice-president (head, cards and payment consumer banking) Ashraf Ali Kadir is targeting the bank’s debit card spend to grow more than 50% in the financial year ending June 30, 2010 versus the previous year.

    Maybank expects the value of its debit card e-transactions to hit some RM2.5bil this financial year.

    Ashraf sees a bright outlook for debit cards in the country as “it can be issued to anybody who owns a savings or current account.”

    The bank has to date issued over seven million cards, of which over two million are Visa debit cards.

    At present, Maybank’s market share of debit cards is 22% of the 30.3 million issued by financial institutions (based on Bank Negara’s 2009 figures) and are used daily for small ticket transactions.

    EON Bank group has seen an uptrend in debit card adoption by consumers, especially over the last two years.

    Cards and unsecured lending head Aaron Tan said growth in the number of cards issued as well as the usage of debit cards was on an uptrend.

    “For EON Bank, our debit card base grew 176% last year. We expect this uptrend to continue, similar to what has been experienced by other markets such as Taiwan, Australia, the United States and parts of Europe,” Tan said.

    To date, the bank has about 300,000 debit card customers and targets to grow the base by a further 20% by year-end.

    Alliance Bank Malaysia Bhd executive vice-president and consumer banking head Liew Swee Lin concurred that debit cards were gaining popularity in Malaysia.

    “Over the last few years, debit card transaction volumes and values have grown steadily, outpacing the growth rate of credit card transactions,” she said.

    According to Bank Negara statistics, the value of transactions for debit cards surged 833% to RM2.8bil in 2009 versus RM0.3bil in 2005 while the value of transactions for credit cards rose 69.4% to RM69.3bil in 2009 from RM40.9bil in 2005.

    Liew said debit cards were expected to continue on this growth trajectory thanks to more innovative products being introduced by players in the market, including many hybrid/cross-branded cards as a result of expansion in partnerships with the retail/service sector.

    Al Rajhi Bank Malaysia director of retail banking Sabry Ghouse viewed debit cards as a “must have” for almost everyone.

    “It’s easy to own, simple to use and widely accepted. This makes the card a way of life in today’s society,” he said.

    He saw the acceptance and preference for debit cards surpassing that for credit cards in the near future.

    “It has already happened in the United State. As there is no element of interest or late payment charges with debit cards, the public will see debit card as a better option and realise the benefit of managing one’s cash more prudently,” he added.

    The bank currently has over 100,000 debit cards issued and plans to increase its card base by a further 50% this year.

    “We will be introducing the first Visa Platinum debit card for our affluent banking customers soon,” Sabry said.

    Hong Leong Bank Bhd, which already has one million debit cards in circulation, is targeting to add 300,000 cards this year following the launch of its latest debit card early this year.

    It aims to have two million debit cards in circulation in five years.

    fr:biz.thestar.com.my/news/story.asp?file=/2010/4/26/business/6122604&sec=business

25. lulu on May 7th, 2010 at 10:49 am

    shitt..my credit card expired on april 2010. but on may 2010…they still charged me rm50 principle….

26. alan on May 7th, 2010 at 11:12 am

    That rm50 principle charges is Valid

27. alan on September 20th, 2010 at 8:23 pm

    Limit on credit cards

    PETALING JAYA (Sept 19, 2010): In a bid to keep household debt under control, Bank Negara Malaysia will impose new guidelines to make it harder for consumers to obtain and own credit cards.

    A senior bank official told theSun that the new rules, to be unveiled in Budget 2011, will restrict the number of credit cards per consumer and allow only those with a yearly income above RM24,000 eligible to own a credit card.

    “We are looking at two main aspects — increasing the income level required for a credit card and restricting the number of credit cards per consumer,” said the official.

    TheSun learnt that under the new rule, a consumer can only own credit cards from two banks of their choice while the minimum income limit to qualify for a credit card will be increased from the current RM18,000 per annum.

    “This will tighten credit card spending as many in the lower income category and below the ages of 30 have been blacklisted and declared bankrupt due to increasing debts,” said the official.
    “The move will also prevent consumers from holding a string of credit cards and cap their spending limit.

    “The rationale is simple. If you are in the low income category, you should not own several credit cards and spend more than what you can afford. It is becoming increasingly easy for fresh graduates and the newly-employed to obtain credit cards.

    “Most of them, upon obtaining their card, go on spending spree without taking into account the interest rates and late repayment charges,” said the official.

    “Over several months, the amount snowballs and the card holder is unable to service his debt, resulting in blacklisting and bankruptcy when the debts cross the RM30,000 mark.

    “The new rules will curb this kind of practices by card holders, especially those below 30 years,” said the official.

    BNM is in the last stages of finalising details with banks and the relevant authorities before the rules become effective. It is learnt that the new rules when Budget 2011 is tabled in Parliament next month.

    As of July, there are 7.9 million principal cards in circulation nationwide with outstanding balances for three months and below of RM1.96 billion.

    Outstanding balances for six months and above stood at RM69.5 million.

    Based on data from Bank Negara, there are 218,561bankruptcy cases as of June, out of which 4,417 were for failure to settle credit card debts.

    Last year, 407 credit card holders were declared bankrupt.

    In Budget 2010 unveiled in October last year, the government imposed an annual service tax of RM50 for every principal credit card and RM25 for every supplementary card with effect from January.

    Following the move, there was a 18% drop in principal cards in circulation and a 17% decline in supplementary cards.

    At present, credit card limits are set at a bank’s discretion with first time applicants usually given limits of 2.5 to three times their monthly income.

    It is easy to qualify for a credit card, with some banks even providing pre-approved credit cards for consumers, based on their basic salary and credit ratings. Some banks offer credit cards to consumers immediately after they take up a hire-purchase car loan
    fr:thesundaily.com/article.cfm?id=51961

28. alan on September 21st, 2010 at 10:09 am

    Reduce credit card interest rates, says Lim

    PETALING JAYA: Bank Negara should consider reducing credit card interest rates instead of limiting credit cards owned by customers to two banks, said Deputy Finance Minister Datuk Donald Lim Siang Chai.

    He said more input was needed before the decision could be finalised as it would stifle the rights of an individual.

    “To have two is a bit subjective. The country is moving forward and we have to consider people’s rights which are getting more recognised,” he said yesterday.

    Lim was asked to respond to reports that Bank Negara would be tightening credit card guidelines in an attempt to reduce household debt.

    According to the reports, Bank Negara was considering increasing the required income level for credit card applications from RM18,000 to a minimum of RM24,000.

    The new rule, which was expected to be announced in Budget 2011, would also see customers only being allowed to own credit cards from two banks of their choice, the reports stated.

    Lim said reducing interest rates was more important than limiting credit cards.

    “We are more concerned about the high interest rates which can reach up to 18%.

    “A lot of people find it difficult to pay because of the high multiplying interest rates,” he said, adding that he had not seen Bank Negara’s latest proposal.

    He suggested reducing the interest rates to between 8% and 10% as part of the measures to encourage more self-control spending.

    “The overall outstanding credit card balance, for both prompt and overdue accounts, is about RM25.7bil and high interest rates is one of the causes,” he said.

    When contacted, a Bank Negara official said they were still looking into the proposal and nothing had been finalised yet.

    fr:thestar.com.my/news/story.asp?file=/2010/9/21/nation/7073483&sec=nation

29. alan on September 21st, 2010 at 10:11 am

    Lower credit-card limit will not impact profitability of banks
    BY DALJIT DHESI

    PETALING JAYA: The plan to limit credit for credit-card usage among the lower income group will affect only the interest income portion of banks in the short term but will not impact joining and merchant fees or the overall profitability of banks, analysts said.

    Malaysian Rating Corp Bhd (MARC) vice-president and head of financial institution ratings, Anandakumar Jegarasasingam, said the lowering of the credit limit was not likely to have a major impact on banks’ profitability.

    “Banks derive income from credit cards in three forms: joining and annual fees, merchant fees when credit cards are used for payments, and interest income when credit is utilised beyond the interest-free period,” he said.

    “The lower limit is not likely to impact the first two sources of income. This is because joining and annual fees are independent of the credit limit assigned to a cardholder.

    “Although a lower credit limit will impact merchant fees that are levied on transactions as a result of the lower value of transactions, this is not expected to be a major concern.

    “In the short term, to a certain extent, the lower credit limit can affect interest income earned from credit-card advances as the outstanding credit-card advances may be reduced to be in line with the new lower credit-card limit,’’ Anandakumar told StarBiz.

    Besides having multiple sources of income from cards, analysts generally agreed that individual banks have their own credit risk management tool that allows them to check the financial credibility of customers and hence it won’t impact their bottom lines in a big way.

    “Individual banks know the “comfort level of their customers”, among others through bank deposits, to ensure that they are able to pay back their credit-card loans,” he said.

    Talk is rife that banks are looking at limiting the credit limit for those earning RM12,000 to RM36,000 a year at two times their monthly salary.

    Major credit-card players like Citibank Bhd, Malayan Banking Bhd (Maybank) and CIMB Bank Bhd as well as other players declined to comment.

    The Association of Banks in Malaysia, in an email reply, said: “Banks are continually reviewing their products and services in tandem with changes in the marketplace to ensure prudent management of credit risk.

    “Admittedly, there have been suggestions from some quarters that for the purpose of instilling better financial management on consumers, tying credit limits to incomes is a possible approach.

    “Be that as it may, any changes to be made to the card businesses would be carefully evaluated and due consideration of all issues will be made before implementation, particularly, in relation to any potential adverse impact of pulling credit.”

    RHB Banking group director of retail banking Renzo Viegas said: “No such decision (to impose credit-card limits) has been made.”

    The mean monthly income of Malaysian households ranges from RM3,000 to RM4,000.

    “The bank’s customer segment with credit limit up to RM10,000 is our largest segment, at about 60% of our card base. However, the Kuala Lumpur/Selangor region’s card base, with its higher income range, has a slightly larger mix of higher credit limit segments.”

    Meanwhile, Consumer Association of Penang president S.M. Mohamed Idris said that the move to cap the maximum credit available at twice the monthly income of the cardholder may give rise to the problem of multiple applications.

    He suggested restrictions on the total credit available, regardless of the number of cards held.

    fr:biz.thestar.com.my/news/story.asp?file=/2010/9/21/business/7068473&sec=business

30. alan on September 22nd, 2010 at 11:28 am

    ‘Limit credit cards per person’ call
    By DALJIT DHESI

    CAP: Lower interest rates may result in more borrowings

    PETALING JAYA: Various quarters are backing the call by Deputy Finance Minister Datuk Donald Lim to lower credit card interest rates but at the same time feel it would be more effective to reduce the escalating household debt by limiting the number of cards a consumer can have as well as the credit limit for cards.

    At the same time, banks are of the view that the current interest rates need not be lowered as it was among the lowest in the region.

    Consumer Association of Penang (CAP) president S.M. Mohamed Idris said it was more important to limit the number of credit cards owned as well as limit the credit available for each card to reduce personal debt.

    “Lower interest rates does not mean less debt as cardholders may just borrow more since it is cheaper to do so. We are interested in reducing credit card debt since even young cardholders are being made bankrupts.

    “Interest rates for credit cards are definitely high because the base lending rates for banks is 6% to 6.3% while the interest rate for credit cards are around 17.5% to 18% per annum. Late payment charge is usually 1% per month and hence the profit that can be made from issuing credit cards explains the popularity of the cards for banks,’’ he told StarBiz.

    Federation of Malaysian Consumer Associations (Fomca) secretary-general Muhammad Sha’ani Abdullah felt the current credit card rates were too high compared to other loans, although in practice the risks were more or less the same. Besides, banks are making commission from each transaction at around 2% to 3%.

    Apart from high interest rates for cards, late charges are levied and merchants pay banks 1% to 2% of the transactions costs. Banking analysts feel the time is right for card rates to be reviewed by Bank Negara.

    In consensus with CAP, Sha’ani said Bank Negara should limit the total value of the credit limit and the number of credit cards. “Can the central bank stop anyone from acquiring a credit card from overseas?’’ he said, stressing that there should a cap on the number of cards a consumer can have.

    Anandakumar Jegarasasingam, Malaysian Rating Corp Bhd (MARC) vice-president and head of financial institution ratings, said the possession of multiple credit cards with a combined credit limit that was disproportionately higher than their income could tempt unwitting cardholders to spend beyond their means.

    Bank Negara’s proposal to impose limits on credit cards was a timely move which had the interests of both the banking sector and that of the cardholding population, he said.

    Based on reports, the central bank was considering increasing the required income level for credit card applications from RM18,000 to a minimum of RM24,000. The new ruling was expected to be announced in Budget 2011, and would also see customers only being allowed to own credit cards from two banks of their choice, the reports stated.

    Lim, however, felt the central bank should consider reducing interest rates which could reach as high as 18%, rather than limiting the number of credit cards. Bank Negara declined to comment on Lim’s views on these matters.

    On whether interest rates should be lowered, the Association of Banks in Malaysia (ABM) said in a statement: “It should not, as the current rates in our opinion are not too high. The rates were revised downwards on March 31, and are already among the lowest in the region. At the time of the revision, a comparative study was made and in Australia then, for example, the rates were between 9% and 19.5%, in Hong Kong they ranged from 17.8%-36%, Singapore 24% (standard), India: 18%-39% and Indonesia: 33%-45%.

    “It must be acknowledged that in addition to funding costs, there are very real and substantial costs surrounding a credit card operation. Given the complexities of the credit card business, these costs include credit risk (non-performing credit) particularly since the amount outstanding is unsecured, fraud risk, administration, infrastructure, administration and customer services costs.

    “Ultimately, a consumer must still exercise caution and control over personal spending and live within one’s means. Consumer education thus remains key and the commercial banking sector would prefer to focus on this aspect.”

    ABM, it added, was confident that any guidelines with regard to card businesses would only be issued after a holistic review and careful evaluation by all parties concerned so as to avoid any negative impact to the businesses as well as consumers.

    HSBC Bank Malaysia Bhd general manager of personal financial services Lim Eng Seong said: “The objective on limiting the number of credit cards owned by customers is to reduce accumulation of debt by consumers. One option that should be considered is to allow more flexibility on credit card pricing beyond the current cap of 18%.”

    fr:biz.thestar.com.my/news/story.asp?file=/2010/9/22/business/7078487&sec=business

31. alan on September 24th, 2010 at 7:02 pm

    Maybank expects higher healthcare spending by credit cards

    KUALA LUMPUR: Malayan Banking Bhd (Maybank) expects healthcare to account for 12% of total spending on its credit cards in the next 12 months, from less than 5% currently, boosted significantly by the bank’s newly-launched Pantai American Express Credit Card.

    Executive vice-president and head of cards and payments Ashraf Ali Abdul Kadir said the use of credit cards had generally risen in recent years.

    “We expect our latest credit card offering easy payment for health services to boost our credit card business substantially,” he said yestserday after the launch of the new card, a collaboration between Maybank, American Express (Amex) and Pantai Holdings Bhd.

    The new card is Malaysia and Asia’s first co-brand credit card with a healthcare service provider.

    Ashraf said the number of Maybank’s credit card transactions at hospitals had increased by 23% in the last 12 months.

    “There is scope for greater use of the cards in medical and healthcare as private healthcare services expenditure has been growing steadily in the past several years,” he said.

    Ashraf said credit cards in the market currently offered limited health-related benefits and with Malaysians becoming more affluent, Maybank expected to sign up 20,000 subscribers for the latest credit card.

    “The Pantai American Express Credit Card offers a 10% savings on hospital charges during admission and 20% saving on hospital suites, priority reception and free porter assistance to the wards at all Pantai Hospitals and Gleaneagles Hospital Kuala Lumpur.”

    Pantai Holdings currently owns nine Pantai Hospitals and Gleaneagles Hospital Kuala Lumpur.

    American Express International (global network services) executive vice-president Kula Kulendran said the launch of the new credit card reaffirmed the power of the Amex brand and that Maybank could leverage on its strong brand name to promote the health industry in Malaysia.

    “We see good market potential to expand our credit card health related services to individuals, local or foreign in other countries,” Ashraf said, adding that the credit card would initially be introduced to neighbouring countries such as Singapore and Thailand.

    fr:biz.thestar.com.my/news/story.asp?file=/2010/9/24/business/7092495&sec=business

32. alan on October 11th, 2010 at 8:59 pm

    ‘Credit card service tax brings desired effect’

    The imposition of the annual RM50 service tax on credit cards has brought the desired effect, with a 16 per cent drop in card ownership – from 10.8 million at the end of 2009 to 9.1 million in mid-2010, the Dewan Rakyat was told today.

    Deputy Finance Minister Datuk Seri Awang Adek Hussein said the drop showed that some holders of the cards did not use them.

    Furthermore, the RM25 service tax on each supplementary card had also resulted in many of these card holders returning the cards, he said when replying to a supplementary question from Datuk Baharum Mohamed (BN-Sekijang).

    Baharum had wanted to know whether the government intended to revoke the service tax, which was imposed on Jan 1. Awang Adek said the government had no intention as of now to remove the tax.

    Earlier, when replying to the original question from Baharum, Awang Adek said that up to last month, the government had collected RM275.5 million in credit card service tax.

    Awang Adek said the service tax on credit and charge cards was imposed for the first time on Jan 1, 1997 and revoked on April 1, 2001.

    He said that between Jan 1, 1997 and April 1, 2001, the tax collected amounted to RM464.88 million.

    Replying to a supplementary question from Dr Tan Seng Giaw (DAP-Kepong), Awang Adek said the government encouraged the use of debit cards, on which the service tax was not imposed. – Bernama

33. alan on November 18th, 2010 at 9:28 am

    Banks wage credit card wars
    By TEH ENG HOCK

    PETALING JAYA: Banks are waging a marketing war to attract customers after millions cut up their credit cards following the imposition of the RM50 government tax.

    According to data from the Finance Ministry, as of Sept 30, there were 8.7 million credit cards, comprising 7.7 million principal cards and one million supplementary cards in circulation.

    This represents a huge drop from the 10.8 million credit cards at the end of last year as many people had cancelled their cards after the Government imposed a tax of RM50 for a principal credit card and RM25 for a supplementary card this year.

    To stop the slide, banks are offering more reward points and giving out cash.

    Maybank offered a customer, who cancelled his credit card in June, 10,000 reward points to reactivate his card last month.

    The 10,000 points were then used to offset the RM50 tax, he said.

    Standard Chartered is offering a cashback scheme to successful applicants to their gold and platinum credit cards in a promotion that will run until Jan 31 next year.

    Gold card holders would have RM88 credited into their account, while platinum card holders would get RM188 credited.

    Citibank’s PremierMiles credit card members would get an extra 15% Enrich Miles points when they redeem their reward points for frequent flyer miles in a promotion until Dec 31.

    Other banks have increased the amount of cash rebates, or devised a usage bonus scheme to offset the RM50.

    Management consultant Lee Sue Yee, 30, said she only has supplementary cards as the government tax is lower.

    “This saves me RM25 a card per year,” she said.

    Accountant Ahmad Huzaimi Ghazi, 27, said he was not too perturbed by the RM50 tax.

    “The RM50 is nothing compared to the high interest rates charged by the banks. I use a card because it is convenient,” said Ahmad Huzaimi.

    fr:thestar.com.my/news/story.asp?file=/2010/11/18/nation/7441121&sec=nation

34. Lim on May 10th, 2011 at 10:39 pm

    Mine experience is embarassing and MBB is unprofessional and worst….
    Maybank sent me a platinum card and bill me gov. tax RM50.00. I was not aware that card was auto activated. I use maybank2u very often and did not know such outstanding charge. MBB dont remind or call. Suddenly all my loan applications got rejected, so i checked CCRIS. MBB tagged it as non performing loan (black listed).
    Can I take legal action against MBB. Who can I complain to.

35. alan on May 11th, 2011 at 6:46 pm

    hi Lim,

    Always deal with MBB directly first

    If you not happy with their resolution then report to Bank Negara before any legal action..