I think it's time to do another resizing on my credit cards.
There are two regulations in place which have only been active in the last one or two years for Malaysia which are making it more unattractive to use credit cards.
Firstly, there is a government tax of RM50 on each principle card that you hold and RM25 on each supplementary card. Therefore, even if there is a free annual fee for the cards, you will need to pay tax simply for owning a card.
Secondly, in order to discourage building up debt, any balance left on a card means that any purchases in the next month immediately incur interest rate charges (previously, if you bought something with your card and paid before the due date of the next statement, there was no interest charged at all). This move benefits those who are already disciplined with their usage but effectively makes this worse for those already in debt.
When the government tax was initially rolled out, I cancelled my cards from three different banks and only maintained two cards. I think that this year, it is time to reduce that to one card...and to only use that card for petrol and emergencies.
I know that people rave about the things they redeem with their credit card points and that they only spend on things that they would have gotten already but the truth is that most of us will naturally spend more when it's on credit. The pinch is felt that much more when cash is used and this also means that you can only spend money that you have.
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