Recent announcement of new guideline on credit card is nothing new as in the past only those having annual income of RM24,000 could apply for credit card. Therefore, the so called new ruling is nothing new but the same old guideline.

Owing to keen competition and big money that banks and finance companies could earn from the card business, some credit card companies could have relaxed certain terms and conditions so as to build up customers base. This could be the very source of credit card debt building up in Malaysia. The all out promotion of credit card with gifts and zero interest installment could have prompted credit card owners to spend ‘wildly’ without seeing the danger of over-spending.

The ‘new ruling’ of minimum monthly income of RM2,000 could not guarantee new credit card owners ability to repay. Since the credit limit is more or less similar to ‘clean loan’, shouldn’t the banks, finance companies and credit card companies look at how much the credit card could save monthly before granting a credit card with credit limit to the applicants? Applicants could be earning RM10,000 per month but in some cases they could only save RM100 per month owing to high financial commitment therefore it makes no sense to base on monthly income instead of monthly saving.

It sounds good for those who haven’t owned any house. But is it really a sound move for any bank to give 100% loan? Who would ‘guarantee’ the loan when it becomes defaulted? Need less to say, such policy is forcing banking sector to take unnecessary risk especially when loan defaulted, overdue interest, penalty interest and legal fees will bring the total outstanding more than the cost of the house.

The house must be not more than RM200,000 but what kind of house will that be since most of the terrace house prices have gone beyond RM200,000 mark? Unless Malaysian government is going to build low cost houses for the first time buyers.

With the hike of price of so many essential items, how much saving will most people have? The full loan means higher monthly installment making first time house borrowers life miserable. Even if loan period could be extended the ever increasing price hike of daily needs might bring more problem to the first time buyers in the long run, not forgetting bank interest rate is likely to increase in the next few years making it a high risk investment for the first time house buyers.