Malaysia Credit Card Interest Highest In The Region
Filed Under (Other News) by Webmaster on 01-02-2009
Tagged Under : credit card, interest rate, malaysia
The interest charged by financial institutions in Malaysia is one of the highest in the region at 1.5% per month which works out to an effective annualised rate of almost 20% per annum. Although many consumer associations and NGOs has requested Bank Negara to impose a lower rate, Pro Trade Shares would prefer if Bank Negara imposes higher restriction such as having a maximum number of credit cards any individual can hold at any one time. With lending rates reduced and lower cost of funds, consumers are now rallying for credit card interest rates to be slashed to help them get out of debt.
Credit card interest is now pegged at 18% a year (1.5% a month) making it an uphill task for those with large outstanding balances to be debt-free.If one can only afford to pay the minimum 5% repayment each month, it could take forever to repay as balances snowball under the high interest rate.There are 10.3 million credit cardholders in the country with total debt standing at RM22.8bil as of Dec 2008.Recently, Bank Negara announced a 75 basis point cut in the indicative overnight policy rate or OPR to 2.5%.
Following this, banks reduced their base lending rates (BLR), which eased the burden on those servicing housing and mortgage loans.
The country’s largest bank, Maybank, has reduced its BLR to 5.95%, from 6.5%, with RHB Bank, Hong Leong Bank, CIMB and Bumiputera Commerce Holding Bhd also among other banks fixing a similar BLR.
Many feel it is about time that credit card interest rate be adjusted, given the challenging economic scenario.
Consumers Association of Penang (CAP) president S.M. Mohamed Idris called for the 20-day interest free period for credit cardholders making purchases to be reinstated, regardless of whether they paid their outstanding balances in full.
