Bank Negara Malaysia introduces tiered pricing structure to promote good financial discipline among credit card users

BankNegara Malaysia wishes to announce the introduction of a tiered pricingstructure for credit card users to promote the use of credit cards as apayment instrument. This is part of Bank Negara Malaysia's continuousefforts to promote prudent financial management and inculcate goodfinancial discipline among credit card users in Malaysia.

Onaverage, one-third of credit cardholders use their credit cards as apayment instrument, settling their credit card outstanding amount infull every month. More than half of cardholders pay at least theminimum amount due promptly and roll over the remaining balance. Forthe benefit of credit card users who have a good track record ofsettling their credit card balances which are due each month, promptlyfor 12 consecutive months, the finance charge will be reduced from themaximum of 18% per annum to not more than 15% per annum. The ceilingrate of 18% per annum will still be applicable for other cardholders.

Creditcard issuers will begin to track the repayment behaviour of theircardholders with effect from 1 July 2007. The details of the newscheme, including the finance charges and its calculations, will becommunicated by individual card issuers. The tiered pricing structurewill be implemented by 1 July 2008.

Bank Negara Malaysia alsoencourages debit cards as an alternative payment instrument. Thedomestic banking institutions are in the process of upgrading allcredit card terminals deployed by them to accept their ATM cards. Theexercise, which is expected to be completed this year, will enable the15.4 million ATM cardholders to use their ATM cards to make purchasesat participating merchants.

The greater use of these paymentcards is part of Bank Negara Malaysia's drive to accelerate themigration to e-payments. Bank Negara Malaysia and the financialindustry will continue to implement initiatives to promote e-payments.
Bank Negara Malaysia
26 June 2007


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This post has been edited by kuenny: Jun 26 2007, 02:00 PM

err...i'm not a creditcard holder, so is this good or bad?
planning to get a card later..

how true is the source?
I worked in a bank, but didn't saw this circular yet.....

what is the point thou? As for those who pay promptly, the lower interest rate charged is not applicable to them anyways...

from bank negara malaysia..
announce after 1200 26/6/2007
Embargo: Not for publication or broadcast before 1200 hours on Tuesday, 26 June 2007

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Added on June 26, 2007, 2:02 pmhttp://www.bnm.gov.my/index.php?ch=8&pg=14&ac=1467

This post has been edited by kuenny: Jun 26 2007, 02:02 PM

thanks for the verification and source........

thank god.... can save extra 3% more from the outstanding balance~~

For debating purposes....
basically it's quite hard for the FI to come out with a policy for different tier pricing. On what basis or assumption one charge for eg. 15% per annum this month than after 3 months doesn't pay; they charge you 18%. Customer than would obviously call in and complain that they were busy lar ask the banks to check past history lar than ask the bank to waive the extra 3% charge so and so.
As a consumer, I guess you would do that too if unintentionally you does happened to be that very busy.

Another thing is - the bank's system is riding on a general IBM platform for most of the banks. First question to ask; can the system be intergrated to cater for this multiple tier?!

I think they are trying to follow the US style of adjustable rates, where those with bad credit history (repayments, defaults, paying on time) will get the higher rates. (I think)

But those already paying on time would not get to "enjoy" the lower rate anyway, coz they already paying on time, thus won't get hit by interest anyway!

Guess its more to encourage ppl to pay up in full faster or at least on time.. less NPL on the books.

Offer the carrot rather than hit with the stick.