Banks in Malaysia have begun raising annual interest rates on their credit cards, something that has received partial favor even from the country’s deputy finance minister.
At least two Malaysian issuers have raised their rates. Spokespersons from Hong Kong Leong Bank Bhd. and AmBank Bhd. confirm to PaymentsSource that they have informed their cardholders of the rate increases.
Beginning March 1, AmBank will charge cardholders who have been paying their outstanding credit card bills on time for 12 consecutive months an annual interest rate of 15%, up from the previous 13.5%. In addition, those who have paid on time for at least 10 months will pay a 17% interest charge, up from 16%, and those who have not paid on time over the previous 10 months will pay the highest interest rate of 18%, up from 17.5% previously, the spokesperson says.
On the same repayment segmentation as AmBank, Hong Leong Bank's new interest rates are 15%, 17% and 18% in the respective categories, up from 14%, 16% and 17%, the spokesperson confirms. The rates also become effective March 1.
The rate increases are in line with a review of the bank’s credit card business, the AmBank spokesperson says. The Hong Kong Leong spokesperson was unable to give a definite reason for the rate increases as of deadline.
A third bank, Citibank Malaysia Bhd., reportedly raised its credit card annual interest rates to 15% from 13.5% for those making prompt payments over 12 months, to 17% from 16% for those making 10 consecutive monthly payments on time, and to 17.5% from 16.5% for others.
A spokesperson Bank Negara, the country’s central bank, tells PaymentsSource it played no role in the rate increases, saying the banks acted on their own.
But Datuk Donald Lim, Malaysia's deputy finance minister, in a statement to the media said the banks’ actions would encourage cardholders to pay off outstanding balances. “We have about 3.3 million principle credit cardholders in the country, and the number of those in debt is a matter of concern,” he said.
Authorities in Malaysia have been trying to bring down the country’s card debt over the past year. In March last year, Bank Negara Malaysia introduced new income rules for credit card applicants (
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