Don’t misuse credit cards, says Fomca
New late charges will affect free spenders
KUALA LUMPUR: Credit cardholders should exercise “caution” when making purchases following the restructuring of finance and late payment charges by banks.
Fomca president Datuk Paul Selvaraj said cardholders should spend within their means and always set aside money for fixed monthly payments to service other loans as well.
“Most cardholders, especially young executives, only think about the minimum payment for credit cards. They do not consider the effects of their outstanding balances getting out of hand.
“Credit cards should be a tool of convenience but a lot of people do not understand the financial repercussions of misuse,” he said.
Cardholders are said to owe an astounding Rm24bil as of last year.
Most banks have introduced new tiered pricing for outstanding balances and an increase in late payment charges effective last Thursday.
Prompt payments for at least 10 months will come under a 17% interest charge (previously 16%) while those who do not fall into either category will be slapped with the highest interest rate of 18% (previously 17.5%).
For late payments, cardholders will be charged a minimum of RM10 or 1% of the outstanding balance, whichever is higher, and up to a maximum of RM100.
Meanwhile, Citibank has announced that credit cardholders with prompt payments of more than 50% of their monthly outstanding balances for 12 consecutive months will be entitled to an interest rate of 8.88% per annum effective March 1.
It said those with prompt payments of less than or equal to 50% of their monthly outstanding balances for 12 consecutive months will be charged a 15% interest rate.
Public Bank will introduce its new tiered financing rates effective April 1, according to its website.
CIMB and UOB are among the banks which have yet to determine their new tiered interest rates.