New Credit Card Rules in Malaysia

Bank Negara Malaysia is tightening credit card requirements for those in the lower-income bracket to keep household debt at manageable levels.

With immediate effect, first-time applicants for a credit card must now have a minimum monthly salary of RM2,000 from RM1,500 previously.

According to Bank Negara Malaysia deputy governor, Nor Shamsiah Mohd Yunus, new and existing cardholders earning RM36,000 per annum and less, can hold only credit cards from a maximum of two issuers. The maximum credit limit has been capped or two times the monthly income of the cardholder

For existing cardholders, they need to choose their preferred two issuers by December 31. For those existing cardholders who are earning less than RM24,000 per annum, they need not surrender their credit cards.

Nor Shamsiah said cardholders would be given at least two years to service their outstanding debt for cancelled cards to comply with the new requirement

For existing cardholders, whose outstanding balance exceeds the maximum credit limit, a grace period of two years will be given to settle the amount in excess of the maximum credit limit

From January 1 onwards, issuers shall review cardholders’ eligibility on the anniversary date of the credit card. During the review, if cardholders have fulfilled their quota of holding credit cards from two issuers, the issuer shall not extend their credit card facility to the cardholder.

Quick and Easy Ways to Become a Bankrupt

Spending money can be a fun and easy thing to do but building up debt is even easier by just carrying a few credit cards. Here are the fastest ways to ruin your personal finance:


1. Don’t track your spending: Don’t care about the formula and the budget that income = expenses + savings. All you want is just to spend as you wish. without considering your limited income

2. Just pay the minimum amount for your credit cards: Credit cards give you extra spending power. Just charge and charge to your heart’s content. When you receive the money statements just pay the minimum sum or any other smaller amount depending on the fund available in your checking account. You are not bothered to make prompt payment and you let the bank charge late payment fees and interest on outstanding balances.

3. Credit card advances: You get cash advances against your cards and buy what you want or to meet your day-to-day expenses when you run out of cash.

4. Follow your neighbors: Your neighbor has just bought a new car. You are thinking that if he can afford it you can too. You go ahead and trade-in your old car which is less than three years old.

5. Skip your loan instalment payments: By now you are unable to make ends meet. You have reached your limit for all your credit cards
and you have no choice but to skip a few loan repayments.


Your spending pattern will not last long because your financial resources are limited and your debt is attracting more and more interest and it is no longer manageable. Very soon, financial institutions where you have obtained your credit cards and loans will file bankruptcy proceedings against you.

Car Loans and Bankruptcy in Malaysia

According to a report in The Star, more than 500 people, mostly aged between 35 and 44 years, were declared bankrupt every month from January to May this year because they failed to service their motor vehicle loans

Once a person is declared bankrupt he will be restricted from, among others, traveling overseas, holding the post of a company director, and will have to give up his assets, including property and cars. He must contribute to the bankruptcy estate, and will only be discharged once the sum owed is settled.

Under the hire purchase agreement, the bank repossesses the car if the borrower defaults the monthly installments for three consecutive months.

It will sell off the car to recover the sum owed and if the amount still owed is more than RM30000 the bank will file a bankruptcy petition in the High court.

In the case where the sum owed is below RM30000 the bank will wait until the amount, with accumulated interest, balloons to RM30000 before filing the petition

How do you avoid a default in car loans and bankruptcy? Read 10 Tips to Avoid a Default on a Car Loan and Bankruptcy.

Bankruptcy and the Management of Debtors and Creditors in Malaysia

According to a recent news item in the New Straits Times, creditors will not be able to present bankruptcy petitions against debtors unless they can prove that all avenues were made to trace the latter for repayments, and delivery of any notices actually reached them. This is under a planned reform of the Bankruptcy Act 1967.

Currently, under the act, only social guarantors are given this sort of protection as it required creditors to exhaust all avenues to recover debts owed to them by debtors.

Insolvency Department deputy director-general Haini Hassan said the reform would also see the end of creditors easily passing the bulk of work to the department to do retrieval of monies from debtors by liquidating their assets. “There is also a proposal for creditors to be given two to three years to do that before filing the petition,” she said in an interview.

The department is also planning to make it a punishable offence (in addition to the current citation for contempt of court) for bankrupts, who failed to file their Statement of Affairs to the department within 21 days after being declared so.

Haini said these reform plans would not only enable better management by both creditors and the department but would also keep the number of bankrupts in the country under control.

Haini also said it was worrying that out of the 218,561 bankrupts in the country, 60 percent were not even aware that they had been declared bankrupt.

Bankruptcy Trend in Malaysia

According to a recent newspaper report, there were 38357 bankrupts in the last five and a half years between the age of 25 and 44. The trend is that people who declared bankruptcy are getting younger. Here is the breakdown of those who declared bankruptcy from 2005 until May 2010:

Take-home messages


• A business venture can be successful or end in failure. The most important thing is not to put all the eggs in one basket. An emergency fund lasting three to six months to cover your normal expenses is a must.

• You can obtain a loan but it has to be included in your monthly cash outflow. If it is not within your budget. Don’t go for a loan to buy a car or a house. Save for a bigger down payment.

• You are not obligated to stand as a guarantor. You cannot control how another person manages his or her finance so you cannot be sure that the person who gets the loan will honor the loan repayments fully. Do you like to pay for something you don’t own every month? This will happen when the borrower defaulted and he or she is nowhere to be found.

• Credit card is not for getting credit (The bank will be very happy if you do): The right way to use a credit card is to back up a dollar your charge to your card with a dollar in your bank account. At the end of the month, you pay the amount due promptly and fully. The fact is that getting credit and incurring debt is easy but getting out of debt is very difficult.

• There are two things in life you cannot escape; that is death and tax. It is necessary to set aside an amount every month to cover tax payable.

10 Advantages of Credit Cards

Are you thinking of giving up your credit cards? Don’t. Credit cards are useful financial tools when you know the proper way to use them. Here are ten ways to use your credit cards to your advantage and spend less.


1. Cashless spending: It is much safer than carrying a lot of cash in your purse. It is convenient when you are running short of cash to buy an urgent and essential item.

2. Use your cards instead of cash: Use your credit cards instead of the amount that you have set aside for your monthly spending. You pay less when you use a credit card that gives you a discount for the purchases of your grocery and petrol. At the end of the month, you just issue a cheque from the account where you keep the money for your monthly expenses. You can’t get a discount when you pay in cash.

3. Simplify your life: Let your credit card settle your utility bills, insurance premiums, and other recurring expenses. There is no need to go to many places to pay for all these ongoing payments.

4. Big-ticket item: Get zero interest installment plan for the purchase of a big-ticket item. You can stretch your payment up to 36 monthly installments without incurring interest. However, you have to make sure that you have included the amount in your monthly budget.

5. Free credit: To avoid late payment charges and interest on the outstanding amount, pay the monthly bills fully and promptly. This is the way to enjoy credit free of charge for one month. Where else can you get credit to make purchases without interest and security?

6. Establish your creditworthiness: It is also a great way to establish your creditworthiness when you pay the monthly bills fully and promptly. It is an indication that you can be trusted to obtain credit and you have the means to pay and you do make payments promptly. When you apply for a loan in the future you will be considered favorably.

7. Best for holidays: See the world with peace of mind just by carrying your favorite credit cards. You can withdraw cash in local currency at any ATM for sundry expenses. It is better than travelers' cheques. Credit cards are accepted worldwide, take your cards along for a carefree holiday.

8. Online purchases: Online purchases are made possible with credit cards. It is safe and easy. If the transaction is not in the order you can always dispute it and cancel the order with no charge to your card.

9. Track your spending: Each and every transaction that you have charged to your cards is itemized and listed in the monthly statement. You will know when and where you have spent your money. There is no way to check your spending if you use cash unless you are willing to spend time to record where your money has gone.

10. A budgeting tool: You know precisely your spending pattern from your monthly credit card statements. It is a useful tool to budget and control your future spending.


The most important thing to remember is that you don’t use your credit cards to obtain credit and incur debt. Use your cards like using your own money. Stop charging it when there is no fund available.

Credit Card and Bankruptcy in Malaysia

According to the Malaysian law, you can become bankrupt when the outstanding sum involved is RM30000 (previously it was RM10000) or more with a default period of six months or more. Defaulting on credit card payment is among one of the ways to be bankrupt.

Among others, being bankrupt, you cannot


• Hold any public office without the approval of the Director-General of Insolvency Malaysia (DGI)
• Pursue and court action without the DGI’s permission
• Leave the country without the court’s or DGI’s permission. The DGI will hold your passport.
• Be a company director or carry out your own business or be involved in the management of a company without the court’s or the DGI’s approval.
• Be involved in the management of a company or be an employee of a company that is owned by your spouse or close relatives and their spouses
• Be a committee member of any registered body.
• Open a bank account without the approval of the DGI


A bankrupt can work but he or she has to leave a certain percentage of his or her income to the DGI to repay debts. A person can be discharged from "bankruptcy" when he or she has settled debts in full.

The sensible way to avoid being bankrupt is to pay your credit card bills fully and promptly every month upon receiving their statements.

The following is an extract from MyPF:

Malaysia Bankruptcy Law Updates

Malaysia’s bankruptcy laws receive an update in March 2017. Here are the key updates.

• The minimum to be declared bankrupt is raised to RM50,000 (from RM30,000).
• Social guarantors can no longer be declared bankrupt. Social guarantors provide guarantees to loans such as educational loans, hire-purchase loans, and housing loans which they are not beneficiaries of.
• Automatic discharge of bankruptcy after three years, subject to good behavior including making payments towards your debt and submitting a full accounting of your monies and properties (previously 5 years and subject to Director General of Insolvency’s approval).
• A debtor may propose a voluntary arrangement to his creditors any time before he is adjudged bankrupt.
• A bankruptcy notice needs to be served personally to a debtor.