RM50 Service Tax for Card Holders | Cancel your Credit Card Now!
The government had in its Budget 2010 proposals last week announced a RM50 service tax on each principal credit card, charge cards, including free cards and RM25 for supplementary cards by January next year.
This is a Bad news and ridiculous to Malaysia credit card holder.
It will effect all the credit cards including that have been promoted with the tag line “Free for Life”.
No more freebies.
Government is expected to collect additional half a Billion ringgit in service Tax from the existing 11 Million credit card holders.
Therefore, I expect most users will cancel their existing credit cards as having more than one credit card is NOT uncommon nowadays.
All your accumulated reward point will be void when the cancellation occurred.
This predictable as customer want to prevent any unnecessary charges and expenses.
Are we being encourage to carry lot of cash all the time and risk to be the victim of snatch thieves?
I have more than five credit cards and do not owe any monies as I pay in full each month.
Why the government need to impose this charge on us, especially on users that spend within their means?
I think the government should not impose the RM50 service tax to those who have more then one card but pay all their credit cards bill in full and on time.
The service tax RM50 will be collected on 1st January 2010 for One year and there will be NO provision for refund of the tax even you cancel the credit card within a year.
The Government goals in promoting on-line-banking and cashless transaction will be effected as most customer will opt using cash.
I have no choice but to cancel all other cards except one of my credit card and lose my Reward Points and my ability to spend wisely using multiple cards.
I feel the Government should look into this matter again and sincerely requested to waiving the service tax for those who use their credit cards responsibility without accumulating any balance every month.
RM50 service tax for card holders
A SERVICE tax of RM50 will be imposed on each principal credit card every year beginning Jan 1.
For every supplementary card, a RM25 service tax will be charged yearly.
The move to impose this tax is to promote prudent spending as the use of credit cards is extensive. The number of cards increased from two million in 1997 to 11 million as of August this year. They exclude the 285,000 charge cards already issued.
Muslim Consumer Association of Malaysia secretary-general Datuk Dr Ma’amor Osman said it would encourage consumers to limit the number of credit cards they hold.
“Instead of having five or six credit cards, it will encourage consumers to reduce their cards to only one or two because it will be costly to pay service tax, interest, finance charges and so on,” he said.
Penang Consumer Protection Association president K. Koris said the service charge would not deter people from continuing to use their cards.
He added that the Government should instead re-look at imposing a restriction for credit cards and allow only those earning a minimum salary of RM5,000 a month to qualify for cards.
KPMG partner Ooi Kok Seng said the RM50 service tax would burden the lower income group but many would continue applying for multiple credit cards as they depended on the credit facilities.
He added that a significant number from the lower income group paid their credit card bills via installments and would not be able to write off the cards immediately.
Meanwhile, in a statement, the Penang Chinese Chamber of Commerce urged the Government to review the proposal as it would hinder domestic spending.
It suggested that the Goverment impose service charge on the second and subsequent cards.
Meanwhile, office clerk S. Siva, 48, plans to return eight of his nine credits on Monday morning.
“I definitely won’t be able to afford the service charge if I keep all my nine cards,” he said.
Siva said although he had nine cards, he only used one and only signed up for the rest after being told that all fees would be waived for life.
from:thestar.com.my/news/story.asp?file=/2009/10/24/budget2010/4969248&sec=budget2010
Fomca Welcomes Service Tax On Credit Cards
KUALA LUMPUR, Oct 23 (Bernama) — The government proposal to impose a RM50 annual service tax on principal credit and charge cards is seen as an effective way to check the problem of card holders being declared bankrupt due to poor financial management.
Federation of Malaysian Consumers Association (Fomca) chief executive Mohd Yusof Abdul Rahman said with the imposition of the tax, only those who could afford the cards would use them.
To ensure effectiveness, an individual eligible to own a credit card should have an income of RM3,000 or more and a higher minimum repayment sum should be set, he told Bernama.
When tabling the 2010 Budget in the Dewan Rakyat Friday, Prime Minister and Finance Minister Datuk Seri Najib Tun Razak said that to promote prudent spending, the government proposed to impose 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 Jan 1 next year.
Mohd Yusof said that though the number of people declared bankrupt owing to credit card debts was small, the situation was worrying because many of them were people aged 30 and below.
from:bernama.com/bernama/v5/newsindex.php?id=449281
PM: RM50 for credit card not a big deal
HUA HIN: Describing Budget 2010 as “painless”, Datuk Seri Najib Tun Razak said the people should not complain about the Government’s decision to impose a RM50 annual service tax on principal credit and charge cards.
Instead, the Prime Minister said they should look at the overall benefits offered by the Govern-ment in the Budget.
“They are getting the RM1,000 tax relief and those paying tax at 27% will now pay 26%.
“So, they get two (relief measures) and only have to pay RM50 (per credit card). Don’t tell me they cannot pay RM50?” he said after a meeting at the 15th Asean Summit here yesterday.
Najib, who arrived here on Friday after tabling the Budget in Parliament, had earlier asked the media on the reaction back home to his maiden Budget.
from:thestar.com.my/news/story.asp?file=/2009/10/25/budget2010/4974446&sec=budget2010
Credit card is a tool that can help the lower income group. It provide a means for them to purchase something by installment to make their life better and sometimes as a mean to manage a proper cash flow rather than resort to Ah Long IF they knew how to use it prudently. Therefore, financial education is an important steps. Credit card is safe and avoid snatch thief because you do not need to carry cash in the handbag.
However, any good tool also can be abused and cause problem. If Government is sincere to help, she should not deprived the lower income group of this tool by imposing RM50 tax. RM50 may not mean a lot to a rich person but it does to the lower income group.
The revenue loss caused by 1% cut in 27% bracket should not be compensated by charging RM50 on credit card holder. Instead what should be done is to set-up counseling center by using 1% from the 27% bracket to help the lower income group to understand how to use this tool effectively with the help of NGO such as CAP, FOMCA, Muslim Association etc. We should face the challenge to use the new tool, otherwise, we stick to old way of doing thing, the poor will remain poor forever.
Government wants to encourage use of Debit cards. Not credit cards.
For those living on credit cards, how many cards do you need?
I would certainly discourage use of credit cards. I only use 1 credit card. So I only pay RM50.
Use credit wisely. That’s what the government wants us to do. Not on expenses. The rich does not get richer by spending, but by investing.
1) Well, i have canceled ALL credit cards (i.e. using future money) a year ago, leaving one Msia credit card, and 1 HK credit card, only to use it as contingency if even i need to bring forward my spending to this month; (or if, after vented through my cash-flow, and that i am willing to pay the monthly interest, or minimum payment, the same as willing to pay interest over a period of time frame anyway),
2) Depending on “needing” and “wanting”, credit card interest at 18% p/a is really not that bad….where competitors offering 9% for a “transfer”.. . compared to over 20% in Hong Kong averagely, but i guess its quite unfair to compare Msia/HK as both countries are essentially based on a very different financial chain, so do factor this in.
3) Recent trend see a lot of people have switched over to using debit card and dumping their credit card…. in china where everything is still growing, using credit money is a phenomenal sight, in USA where they are still in the brisk of not so near to recovery, many families are trading it for a debit card, it is still after all a cashless vehicle.
4) About interest charges of 18% p/a for any given credit card, since it is worked out as percentage, the higher the amount spent (most of the time we don’t recognized it as the closing month total, but it is), the end result after multiplying the given percent is proportionally higher, depending whether we pay up in full the following month or in partial, either way it takes money out of my pocket… therefore i “intentionally” set my credit card in system-auto- payment in FULL amount on the following month, and that “intentionally” forces all my expenditure to current moment, with that arrangement i take advantage of the 30 days credit term interest FREE.
4) Any form of TAX, without the fancy name in front of it like “service”… ..is a form of INCOME for someone else, when tax is incurred, it can only mean one thing, there is a lot to be make by simple multiplying equation, for someone else…..i don’t reckon the reason is due to discouraging people from using credit, try not paying your statement, you get very prompt phone calls asking when you plan to pay-up, failing which you have a blocked card and a bad rap in the system, discouraging enough.
5) The whole financial system worked based on interest ( or fancily express it as TAX)….if i work in a financial institution, civilian like us will be just a monthly interest generating vehicle.
good read.
I’m currently holding two, and planning to cancel the one with the lesser perks, and seldom used.
nowadays some ATM cards come with debit card functions. and let’s hope the government wont impose service tax on those as well.
Sigh! Malaysia is now getting “poorer”?
Imposing service tax Rm50-00 per credit card just like squeezing money from Rakyat. Imaging each credit card holder having more than 1 cards with them, government will generate revenue > RM550 million (11 million x Rm50) a year with effect from 1st Jan 2010.
Banks are planning to absorb these service tax?
If banks were to do so, indirectly “government” is “robbing the bank” also…. haha!
I don’t like to use debit card as bank will hold part of your money when you use it.
For example, a recent trip to petrol station to pump RM20 worth of petrol. I went back to check the bank account online. The bank hold RM200 from my account. After a few days will the amount be release minus the RM20.
Credit card is a wonderful tools. Charging RM50 per card will not touch people to be prudent in their spending. Creating more seminar to educate the public will.
Credit card should impose stricter rules, like minimum monthly income to qualify should be increase. The credit limit also should be lower. Always keep a record of what you spend.
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Waive RM50 tax on the first credit card
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I REFER to the article “RM50 credit card service tax should not be a ‘plastic hungry’ move” by Yap Leng Kuen. After reading it, I couldn’t help but share my two cents’ worth as well.
As mentioned in the article, the credit card is a more convenient and efficient way of doing business transactions in Malaysia. I couldn’t agree more, especially living in this new, technologically advanced world of high-speed Internet and online shopping.
Besides that, credit cards can be used as an important life-saving tool as well. I recently experienced how credit card use can make a difference in a life-or-death situation.
My dad suffered a mild heart attack and was rushed to a private hospital. We had not insured his health. When his condition stabilised, the hospital refused to continue treatment until a guarantee of RM10,000 was deposited. As a junior executive, RM10,000 is not a small amount. My sisters were at work and they would take time to reach the hospital to provide the financial assistance. So I used my credit cards; it took me not one but two credit cards combined to be able to pay the necessary deposit and save my dad’s life.
We are disappointed with this credit card service tax as announced in Budget 2010. We believe it is more of a hindrance to the rakyat. A sum of RM50 may not seem much, but it would only burden the poor rakyat and push them to the very edge. Also, I believe in the current economic climate, when people are still struggling to find a job that they might have just lost, the tax is badly timed.
While we are very sure that Prime Minister Datuk Seri Najib Tun Razak’s intentions are noble, we sincerely hope he would reconsider his decision. There are reports of more people accumulating debts, whether by spending beyond their means or just surviving on a tight budget.
In our Prime Minister’s quest to help the rakyat live a more prudent lifestyle, it is my hope that he will not rob us of our right to basic credit facilities. I suggest that the RM50 credit card service tax be imposed on the second card onwards, not the first.
I believe we all agree that the credit card is an important tool for business and personal convenience. By acting on this suggestion, our Prime Minister will certainly strike the right chord with the rakyat. – BLURKID84, Kuala Lumpur.
from:thestar.com.my/news/story.asp?file=/2009/11/30/focus/5205669&sec=focus
I would personally suggest that tax should impose to those people who are carrying more than one credit card and not every credit card holders. Gov wants to control the bad habit of Malaysia in spending their money thru credit card which is good, but if you impose RM50 riggit to every credit, it seems like gov wanted people to stop using credit card. If you are good consumer, you will know how to use credit card to reduce your financial burden on each of the month.having credit card also for emergency use if you do not carry much cash with you.
Citibank confident of retaining 20% of credit card market
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itibank Bhd aims to retain 20 per cent of the credit card market by offering more compelling promotions and privilege reward for its customers.
“The industry expects double-digit growth and we will grow in tandem with that growth this year. The promotions will help us to retain our position,” Head of Consumer Markets Fabio Fontainha said at the launch of Citibank’s “My Passion”, My Rewards” campaign here on Monday.
Some 100,000 customers are expected to join the campaign where they need to only spend RM50 and above in a single receipt to participate.
They stand to win grand prizes worth up to RM500,000 and guaranteed rewards points of more than 200 million points during the duration of the campaign which ends on April 30, 2010.
Citibank, which has set aside RM5 million for campaign advertisements and promotion, would continue to introduce more products, services and promotions this year, which in turn, would increase the usage of its credit cards.
Meanwhile, Citibank’s Business Director Cards & Consumer Lending Anand Cavale said consumers would become more aware of the bank’s products and promotions via this campaign.”
“So, we do expect to see an increase in the usage of our cards with those programmes.”
“This is just the beginning of the year and we will have more promotions throughout the year,” he said, adding that the bank would double the number of participating merchants to bring more excitement to its one million customers.
Currently, there are over 1,000 merchant establishments, locally, and over 25,000 worldwide offering discounts and privileges to its cardholders.
fr:biz.thestar.com.my/news/story.asp?file=/2010/1/18/business/20100118141215&sec=business
I’ve returned all my credit cards (all ‘free for life’ cards) except one, Citibank’s. The charge of RM50 into Najib’s coffer will be imposed in Aug so I’m looking for a debit card now.
It’s truly an unfair charge. I don’t have any outstanding balance with any of my cards. So why does najib wants to find fault with people like me?
Impose this fee on those who have outstanding balance. They are the ones who abuse the credit given to them.
To me having credit card is God sent as I have all my utility bills paid through the auto-billing mode. I would like to invite najib to bring his utility bills (that if he has one) to any post office and trying lining up there.
For this I now truly hate the govt. The govt wants to make like difficult for everyone and not offer solutions.
This is my reflection on the matter. Come July I am returning my now only credit card, a Citibank card – the most convenient card to use, but I have not choice as I am NOT giving a cent to najib’s govt.
P.S: Citibank has an offer to offset the credit card tax by using one’s accumulated bonus points. Why should I? My advise to everyone, don’t do that, just return your credit cards and send the strongest message to najib.
goooooooood, i think this is positive atitude form goverment of Msia and people must know the government did this only to protect the people of Msia especially who are not well aware of how they should use their credit card and how they can keep track on their spendings .
if the person is not well aware of how to use his/her credit card he/she can contribute 1% of bankrupcy to this country, so what if 11m credit card holder spent just the way they like? this is definetly buncrupcy……..bye
Citibank targeting 100,000 new platinum cardholders
KUALA LUMPUR: Citibank Bhd is targeting 100,000 new cardholders in the next three years with its newly launched Citibank Cash Back Platinum Card.
“We believe more customers are looking for products that offer value and meaningful returns,” said Citibank cards & consumer lending business director Anand Cavale after the card launch on Tuesday.
Anand said Citibank had conducted an extensive research in Malaysia and in the region, which revealed that 40% of consumers preferred money savings or cash rebates on their credit card purchases than any other type of reward.
The Citibank Cash Back Platinum Card provides instant cash back of up to 5% on popular spend categories such as petrol, groceries, phone bills and pharmaceutical purchases throughout the year.
According to Anand, cash back would be automatically credited into the cardholder’s account on accumulation of (cash) credits of RM50.
Citibank currently has 100,000 existing platinum cardholders.
fr:biz.thestar.com.my/news/story.asp?file=/2010/5/25/business/20100525153427&sec=business
Citibank still credit card leader
By Hamisah Hamid
THE RM50 service tax imposed by the government on credit and charge cards from January this year has caused the card industry to shrink 15 per cent, as measured by the number of credit card accounts.
However, market leader Citibank Bhd said that cancellation of its cards has been lower than the industry average.
According to its head of consumer markets, Fabio Fontainha, Citibank credit cards cancelled in January-June this year were about two times lower than the industry average.
“The industry shrank about 15 per cent during the period and we gained market share because our cancellations were fewer,” he told Business Times in an interview in Kuala Lumpur.
Fontainha expects the industry to experience more cancellation of credit cards until the year-end.
There are 11 million credit cards in circulation as of August last year, compared with two million in 1997. The number excludes the 285,000 charge cards issued.
Fontainha said Citibank is the market leader in credit cards with 20 per cent share of card usage.
The bank has launched credit cards targeting specific market segments, such as its Platinum, Cash Back Platinum and PremierMiles.
Fontainha said that in terms of card acquisition, the second quarter saw 100 per cent increase compared with the first quarter.
“This indicates good response to our efforts to improve and strengthen our value proposition and client service,” he said, adding that the preference now is for credit cards with features that are easy to understand and use.
When asked if Citibank will be launching more credit cards this year, Fontainha said the bank will come out with a new product if it sees an opportunity.
“Currently, we are pleased with the products available to our clients in the rewards, cash back and air miles product spaces. We keep working to make these products even better,” he said.
Citibank also offers co-branded credit cards with partners such as AirAsia, Shell and Giant.
fr:btimes.com.my/Current_News/BTIMES/articles/23CTCREDIT-2/Article/index_html