By M. KRISHNAMOORTHY
KUALA LUMPUR: Credit cardholders will have reason to smile, as the stiff 18% per annum interest rate has been reduced effective July 1.
Bank Negara has introduced a tiered interest rate to reward cardholders who pay their monthly statements before the due date.
For those who pay their credit card bills promptly for 12 consecutive months, the interest rate is reduced to 15% per annum. The cardholder will get to enjoy the lower interest rate from the 13th month.
For those who pay promptly for at least 10 out of 12 months, the interest rate is be lowered by 1% to 17%. The ceiling rate of 18% per annum will still be applicable for other cardholders.
The comforting news is that cardholders do not have to settle the outstanding amount in full they need to pay only the minimum amount involved.
Credit cardholders have been informed of the new-tiered interest rate structure by their respective banks.
An Association of Banks Malaysia official said Bank Negara had introduced the tiered finance charges to promote more prudent financial management among credit cardholders.
On average, one-third of 2.7 million credit cardholders use their credit cards as a payment instrument, settling their credit card outstanding amount in full every month.
Over half the cardholders pay at least the minimum amount due promptly and roll over the remaining balance. .
It was reported earlier that from July 1, credit cardholders who make minimum or partial repayment of their monthly outstanding amounts would no longer enjoy the 20-day interest-free period for new retail transactions.
However, those who settle their credit card outstanding amounts in full every month will continue to enjoy the interest-free period.