No more interest-free period for credit card users who make partial payment

Wednesday July 2, 2008

By IZATUN SHARI

PETALING JAYA: From Tuesday, credit card holders who make the minimum or partial repayment on their outstanding amount monthly would no longer enjoy the 20-day interest-free period for new retail transactions.

Those who settle their credit card outstanding amount in full every month will continue to be granted the interest-free period.

Bank Negara confirmed that the ruling took effect Tuesday as part of its effort to promote the use of credit cards as a payment instrument, and to encourage prudent spending and good financial discipline.

A year ago, Bank Negara took the initial step, announcing a new interest rate scheme for credit card users. Credit card issuers then began tracking the repayment behaviour of their cardholders from July 1 last year.

In a statement Tuesday Bank Negara said: “More than half the cardholders pay at least the minimum amount due and roll over the remaining balance.”

For credit card users with a good record of settling their credit card balances due each month promptly for 12 consecutive months, the finance charge will be reduced from the maximum of 18% a year to not more than 15%, it added.

As at the end of last year, one third of the 2.7 million credit card holders in the country settled their outstanding amount in full every month.

Bank Negara said banks and credit card issuers had already begun notifying their customers on the matter.

A spokesman for Public Bank Bhd said the bank had notified its credit card holders on the scheme in June and July last year and again in April, this year.

“We gave them ample notice because we needed to track their 12-month repayment behaviour history,” she said, adding that the bank had 900,000 credit card holders.