New Rules on Credit Cards: NO Credit for LOW Credit?

New Measures on Credit Cards had been announced by Bank Negara Malaysia (BNM) to promote prudent financial management and responsible business practices. Summary on the announcement made:
  • For new credit card holders, minimum income eligibility is set at RM24,000 p.a
  • For cardholders earning RM36,000 p.a and less, the following would be applicable:
    • Cardholders can only hold credit cards from a maximum of 2 issuers
      • Affected existing cardholders are given up to the end of 2011 to select their preferred issuers.
      • Cardholders will also be given at least 2 years to service their outstanding credit card debt for the credit cards that have been canceled for the purpose of meeting this requirement.
    • The maximum credit limit extended to a cardholder shall not exceed 2x their monthly income per issuer.
      • For affected existing cardholders, a grace period of 2 years will be given to them to meet with the new requirement.

Example of Credit Cards
How about credit card issuers?
  • Credit card issuers are required to adopt fair, transparent and responsible approach in marketing and offering of credit cards to consumers
  • Can issuers increase cardholders' credit limit without obtaining their consent? NO
  • Can issuers offer a credit advance in the form of cheque payable to cardholders, if they did not request for it? NO

Ease of comparison and making decisions...
  • Issuers to provide a Product Disclosure Sheet that contains key information on the card's features, fees and obligations of the cardholders.
  • Issuers to display prominently alerts to communicate to cardholders the implications of meeting only minimum and partial repayments.
  • Annual statements will be issued at the end of each year, providing information on how long it will take to fully pay off the cardholder's outstanding balance and the total interest costs if only minimum repayment made.

How to make Credit Card Infrastructure more Secure and Safe?
  • Effective 1 January 2012, transaction alerts via Short Messaging Service (SMS) will be implemented after each transactions are performed
  • Effective 1 January 2015, Personal Identification Number (PIN) verification for all card transactions will be implemented
To make our Credit Card safer

Finance Malaysia have a say
The eligibility starts from minimum RM2,000 per month salary is good. We should not give credit to those lower income group as that will only encourage them to spend with credit. But, the maximum credit limit of 2x monthly income is somehow too conservative. In fact, issuers are giving 3x credit limit currently, which is deemed reasonable. 
Problem arise when we purchase a laptop worth RM2,500 for example, and opt for 0% interest repayment scheme. Even though we are capable to repay, but the credit limit balance is reduced by RM2,500 straightaway, and it left very little only.

Understandably, the measures is introduced when Malaysian households debt is considered very high currently. Overall, it is good for the banking systems, and I believe Malaysians welcome the extra security features to be imposed to instill confidence of public on the usage of credit cards.

Source: Bank Negara Malaysia

Comments

Post a Comment

Popular posts from this blog

Exclusive Interview: 2011 8TV Hot Chef (美食型男) Jason Cha

Image
Dubbed as one of the most handsome guy among the participants of popular 8TV shows Hot Chef ( 美食型男 ), Jason emerged as the ultimate winner, not by his look, but his cooking skills. Since then, he became a familiar face in Malaysia. Did you recognize Jason shopping at Mid Valley lately? In order for us to understand more about him, below are some of the his personal details: Full Name            : Cha Kian Heng Age                      : 34 Hometown           : Ipoh, Perak Status                  : Married Hobby                  : Collecting Thai Amulets Favourite Foods : Italian Pizza with many many cheese Favourite Sports : Badminton Favourite Sportsman : Fernando Torres (football player of Spain and Chelsea currently) The Interview: Q: What makes you decided to join the 8TV's 2011 Hot Ch...
Read more

Career Lessons from Breaking Bad

Image
AMC's Breaking Bad ended with a bang last Sunday, leaving viewers generally content and definitely shell shocked. Though the ride is over, we can finally look back at the series and reflect on how we can learn from both Heisenberg's victories and mistakes. How can a meth kingpin help you and your future careers? Here are some takeaways : 1. Be hard to replace   : Find a specific skill set and make sure you are good enough that nobody can quickly take your place. Whether it be modeling, analysis, writing, communication, or even a certain product with a 99.1% purity, having a specific niche or strength can ensure job security. Just try not to kill fellow associates to eliminate competition. 2. Associate with the right people : If you are the smartest person in the room, you're in the wrong room. Surround yourself with people who you believe can bring out the best in you. Doing business with a high school dropout and drug addict will certainly lead to complications in the fut...
Read more

Things We Now Know

The poor are losing ground in the new Obama world.  The facts are showing up even in the halls of collectivist extremes like the New York Times.  The rich are getting richer and poor are being locked in place.  Big government is throttling the economy and the hopes and dreams of lower and middle class Americans. Today's Wall Street Journal's article by Simon Constable lays out some of the simple and obvious facts of the Obama era: "The richest 20% of households account for 38% of spending, according to government data for 2011, the latest available.  Compare that with 2003 when the top earners spent 26% of the total."  The article goes on to say..."it could get even worse."  It will. Who really benefits when the regulators strangle the banks?  Do banks really need to get much more conservative in their lending practices?  Why does the government know best?  How far can you stretch the FDIC guarantees before American banking is simply a subsid...
Read more