Govt will not abolish interest charges on credit cards

KUALA LUMPUR: The government will not abolish the interest charge on credit cards, the Dewan Rakyat was told today.
Stating this, Deputy Finance Minister Datuk Othman Aziz said the government had no intention of following the method taken by the United Kingdom (UK).
He was responding to Datuk Seri Hasan Malek (BN-Kuala Pilah), who had asked if the government has any joint programme with the central bank and local banking industry to abolish the interest charge on credit cards as done in the UK.
"Many preventive measures have been taken by Bank Negara Malaysia (BNM) since 2006 to avoid credit card borrowers from being in debt for a long-term," Othman said.
He said the measures include allowing only eligible users to be given credit facilities and increasing the minimum annual salary from RM18,000 to RM24,000 and enacting a consumer credit law to govern credit supply and protect consumers.
"The reduction or even abolishment of interest charges on credit cards as implemented in the UK will not necessarily benefit the country's economy.
"Instead it will promote a habit of non-prudence and indiscipline among credit card holders," Othman said.
He also said the impact of credit card debts leading to bankruptcy is still relatively low.
Othman said only 1,598 or 0.04% of credit card holders in Malaysia were declared bankrupt for high debts as of end-2017.
"The total number is still under control and there are many preventive measures being taken to ensure those given credit cards have the ability to pay back.
"For those who are having problems in paying their credit card balance, we will help them through agencies such as the Credit Counselling and Debt Management Agency (AKPK)," he said, adding that many credit card users had sought AKPK's assistance for debt management programme.