No more FREE FOR LIFE credit card in Malaysia after 31st December 2009! Referring to the latest Budget 2010 Malaysia, each principal credit card holder will be imposed a Service Tax of RM50 beginning 1st January 2010. Whereas, RM25 service tax will be charged yearly for every supplementary credit card.
Credit Card Service Tax
It is not cheap, just imaging if you have 5 principal & 2 supplementary credit cards, the yearly charges will be:
Principal: RM50 x 5 cards = RM250
Supplementary: RM25 x 2 cards = RM50
Total: RM300 / year
Credit Card Cancellation
Foresee the announcement will urge many people go to cancel credit card and keep bankers busy for the next two months on handling the credit card cancellation procedures before the service tax is imposed. What will be bank’s next move to overcome the changes? Will Banks absorb the cost of service tax? Or rewards you with higher cash rebate?
Good or Bad Policy
For long run, it is a good move to encourage consumers to reduce their cards to only one or two and having better discipline on cash flow management. Unfortunately, it has became an unnecessary burden for good paymaster cardholders that are well managing their cash flow and paying full settlement every month. Do you have any better proposal?
My Point of View: I will still keep at least one cash rebate credit card for my financial planning purpose and cancel the rest. Reasons:
- Maintaining good payment record for better credit to loan more money from bank for investment
- Cashless shopping experience based on consideration of security and convenience purposes
- The credit facility of ‘buy first pay later’ sometimes do help as emergency fund especially when we are facing short-term (1 or 2 months) cash flow issues due to some minor emergency cases