A Personal Finance Blog for Malaysian: Right move to control credit card approval

Tuesday, March 22, 2011

Right move to control credit card approval

As posted earlier, Malaysian household debt is the highest (except Japan) in Asia. It is good to note that Bank Negara is doing something.

New Credit Card Measures can limit (further) rise in household debt.

Salient points:

  1. Min income from RM18,000 per year to RM24,000 per year;
  2. Max 2 issuers to issue credit cards for income below RM36,000 per year. (no more option for using Balance Transfer to cover personal debt... good news for loan shark?)
  3. Max credit limit 2 months salary per issuer (i.e. can get  credit limit of up to 4 mth salary from 2 issuers).

However, if consumers are not educated, which lack of spending discipline, they may end up going to "loan shark" as the option for balance transfer no longer available.

Some expert said the Banks actually no longer interested to issue card for those monthly income below RM3k as the purchasing power of these group of consumer is weak. Look at OCBC Titanium and Citibank Cash Back, required annual income level are RM36,000 and RM48,000 respectively.

What's next to control the ever increasing household debt?

How to prove one income is above RM36,000 in order to get card from 3rd issuer? Must submit income documentation as applying for house loan?

There are too many questions related to this new measure, we hope Bank Negara can do a better job.