Wednesday October 7, 2009
‘Merchants’ helping debtors save on credit card interests

GEORGE TOWN: Credit card debtors are now seeking the aid of “collusive merchants” to help them pay off their fully utilised credit limit to save on overdue interest.

State Commercial Crime chief Asst Comm Roslee Chik said there have been four such cases in the state over the past three months alone.

He said, through this tactic, credit card debtors save between 6% and 14% on overdue interest imposed by banks.

“Banks usually charge 18% per annum on the principal amount but still allow you to continue using your card if you pay the minimum charges monthly.

“In this case, if the debtor fully utilises the credit limit of RM10,000, the ‘collusive merchant’ will help them clear the payment in one sum.

“The credit card holder will have to pay the ‘merchant’ RM1,800 (18%) in cash,” he said.

ACP Roslee said the “merchants” would then pretend to be electrical companies and “create” a transaction for the purchase of electrical goods worth RM10,000 in an easy payment plan, to be paid in instalments between one and three years.

“For Easy Payment, banks charge card holders only 4% interest per year.

“So if you pay in one year, you’re paying only 4% interest instead of 18%, plus you can pay the RM10,000 in monthly instalments.

“If you’re paying via Easy Payment for three years, you’re paying only 12% (3x4%) instead of 54% (3x18%) interest,” he said, adding that the “merchant” earned RM1,800 per transaction.

ACP Roslee said the “merchants” could be charged under Section 420 of the Penal Code with fraud while the card holder could be charged under the same Act for abetting the merchant.