RAY

The Star, 22 May 2008
Some 6,000 go bankrupt due to credit card debts

MORE than 6,000 credit card holders have been declared bankrupt in the past four years, with the industry facing about RM2.5bil in bad debts, Second Finance Minister Tan Sri Nor Mohamed Yakcop said.

In a written reply to Liew Chin Tong (DAP – Bukit Bendera), Nor Mohamed said: “Unpaid debts not more than three months old amount to RM2bil while unpaid debts exceeding three months which have been classified as non-performing loans amount to RM500mil.”

Up to February this year, there was a total of RM23.3bil in credit card debts of which RM20.8bil was the current debt.

Nor Mohamed said according to statistics from July to December last year, 30% of card holders settled what was owing in full while 60% of what was spent every month was paid up in full the following month.

“Almost half of all cardholders pay at least the minimum amount on time,” he said.

Nor Mohamed added that of the 5,566,871 applications received by credit card institutes last year, only 2,764,085 or 49.7%, were approved.

“This shows that credit card approvals are not given easily, contrary to public perception,” he said.

Nor Mohamed said Bank Negara had also issued conditions to credit card issuers about selling, marketing and promoting credit cards.

He added that all local banking institutions were also in the midst of upgrading their credit card terminals to accept ATM cards as a means to encourage alternative payment instruments.