No more interest free period for credit card holders who didn't make full settlement

A recent article posted by SM Mohamed Idris, president of Consumers Association of Penang on Malaysiakini website alarmed all credit card holders in Malaysia about the change in interest free period of their credit cards, which will take effect on 1 July 2008.

Currently, credit card holders in Malaysia enjoy a 20 days interest free period from the card issuer's statement date for their retail transactions, regardless they've settled their previous month balance in full, partially, minimum, or unsettled. This priviledge of interest free period will soon be changed following the introduction of a new Tiered Interest Rate Structure
on retail purchases imposed by all credit card issuers in Malaysia, so called to be in line with the "latest guidelines by Bank Negara Malaysia".

Under the new structure, the 20 days interest free period for retail transactions is applicable only for card holders who have paid the previous month balance in full on or before the payment due date. If the card holder opts to pay partial or minimum payment, finance charges for retail transactions for the following month will be calculated from the day the transactions are posted to the card account, i.e. there will be no more interest free period for credit card account with any outstanding balance.

This will affect all the Malaysian credit card holders who are not afford to fully settle their balance in due time, and will further increase their burden with even more interest imposed for every transaction made with the credit card thereafter.

Although this will force all Malaysian credit card holders to be more caucious in spending with their credit card, it will also penalize those that need to use their credit card for emergency (eg. repairing broken belongings, hospitalization, baby birth, funeral, urgent turnover need, etc...) and need to take some times to settle out that emergency spending of larger amount than usual.

I hope that the existing 20 days interest free period can be retained, at least for the good credit card pay masters who settled at least their minimum amount without failure.

Click here to read the original article by SM Mohamed Idris.