Thursday July 3, 2008

Bank Negara’s move criticised

PETALING JAYA: Consumer groups have criticised Bank Negara’s move to abolish the 20-day interest-free period for new retail transactions for credit card holders who settle a partial or minimum payment of their outstanding amount.

They said the move only enriched the banks with easy profits rather than help those who were already facing problems with credit card debts.

“Banks should be more sympathetic towards consumers. Some banks are getting richer at the expense of people’s misery. Don’t let Bafia (Banking and Financial Institutions Act) become mafia,” Malaysia Consumer Association of Malaysia president Datuk Dr Makmur Osman said when responding to the Bank Negara ruling, which took effect on Tuesday.

“The 20-day interest-free period allows consumers to arrange their spending. If those who pay partial or minimum amount don’t enjoy it, let’s be strict and not have any more credit cards.”

He urged consumers to stop using credit cards altogether and called on the Government to ensure that there was a mechanism to ensure that it benefited the people rather than the banks alone.

Consumer Association of Penang pointed out that the ruling created another source of easy income for banks from the large number of credit card users who could not afford to settle their outstanding amounts in full.

Only one-third of the 2.7 million credit card holders in the country settled their outstanding amounts in full every month.

“Those who are making minimum payments now will earn new interest. It is totally unfair,” CAP president SM Mohamed Idris said.

“Bank Negara is not helping those who are already facing problems. They will get deeper into debt.”

Fomca secretary-general Muhammad Shaani Abdullah said Bank Negara should be tough on the easy approvals of credit cards.

“Consumer behaviour will not be determined by the move. It will not change habits in credit card users. Those who can’t afford to pay in full will still be making partial or minimum payments and they are now burdened with higher charges,” he added.