Corrected at 3:25pm, 27 Oct 2009
I MUST say that Budget 2010, announced by Datuk Seri Najib Razak on 23 Oct 2009, contained quite a few surprises for better or for worse. And my observation is from someone who has pored through the government’s budget over the past five years.
(Source: babble.com) For one, I’ll have to start picking up the phone over the next few weeks to cancel my many credit cards. An unwelcome announcement was that beginning 1 Jan 2010, we will be taxed for every card we own, regardless of whether we are or aren’t in debt.
At RM50 per card, and RM25 per supplementary card, that’s probably enough to set me back at least RM700 per annum. Yes, I have indeed a whole string of credit cards, but thankfully without any debt attached to them.
I have had multiple credit cards since the days of running my own company. Trust me, they served me well as my short-term “Ah Long”. In times of crisis, such as the Asian financial crisis in the late 1990s, I dipped into them to pay my employees their salaries. It was an expensive loan, but it served as a reliable last resort and tided me over during the tough times. You can imagine how much time I spent filling and faxing “interest-free balance transfer” applications!
Such days are long gone, as I no longer have scores of employees to support. But I kept my cards, cancelled some and applied for new ones for different reasons. You see, I’m a sucker for ensuring I get the best deals. And now that retail outlets and services are literally embedded into credit cards, you want to own them just to make sure you enjoy maximum discounts or cash rebates. I’m sure the missus enjoys having the supplementary cards as well.
My favourite is the Shell Citibank card, which gives me 2.5% cash rebate for all my expenses at the Shell petrol pump, regardless of carry-forward balance. Spend RM500 per month at the pump, get RM150 back per annum. What’s more, even for non-Shell fuel purchases, I get 0.75% cash rebate, credited into my account the very next month. That’s much better than most, if not all, credit card point awards, which are worth between (corrected) 0.40 sen and 0.55 sen per point (yes, I worked it all out), or up to only 0.55%. What’s more, you’d need to take the trouble to convert these points to gifts or vouchers, or even in some cases, cash.
If the card’s so good, why do I own others? Well, because they come with other benefits. I have the AirAsia Citibank card, which gives me the opportunity to do advance booking when there are promotions. This is especially useful for those crazy “Zero Fare” promotions. Then there’s the HSBC card, which offers fairly attractive discounts at many food and beverage outlets — 10% off at Starbucks, no less.
And then there’s the Maybank American Express Card, which gives you two or five or 10 times the reward points at some of the most popular shops and restaurants. This means a rebate of up to 5.5%. Or a further discount of 20% for “on sale” items at stores like Metrojaya.
There’s more, but you get the idea. You may argue that I get charged annual fees for these cards as well. But if you make the effort to call the bank and threaten to cancel the card, these fees will just get waived.
Govt earns millions
As of August 2009, there are about 11.1 million credit cards in circulation in Malaysia, of which approximately 88% are principal cards, while the rest are supplementary. Assuming the status quo, that’ll work out to a substantial sum of RM520 million in additional taxes to the government. For a government that’s short on cash, I suppose everything counts.
Snip, snip (Pic by stangot / Dreamstime)The Finance Ministry has claimed that the government is concerned about credit card debt, and we should be. But to quote a blogger, Lee Wee Tak: “If you want to control credit card debts, more effective measures would be to impose stricter guidelines on qualification, credit limits of cardholders and limit the number of cards held. Not by increasing the financial burden of all cardholders, whether they are having a debt problem or not.”
But for now, the time has come to say goodbye to some of my favourite credits cards. Sob!
Tony Pua is Member of Parliament for Petaling Jaya Utara under the DAP. He is the DAP national publicity secretary, as well as the investment liaison officer for the Penang chief minister, based in the Klang Valley. He loves his credit cards.
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