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Easy cash turns many into bankrupts

New Straits Times
14 Nov 2011
Local News
12,13
English
N/A
Daily

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Full Color
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1153 cm
RM 34,106
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Easy cash
turns

many into
bankrupts
ALARMING Uncontrolled spending and
quick access to credit cards result in more
card holders facing financial distress write
Rozanna Latiff and Roy See Wei Zhi
Malaysian youth are
becoming increas
ingly reckless with
spending thanks in
no small measure to

the convenience offered by credit

cards

their 20s

He said there were many reasons

why the public were racking up in
creasingly high debts
Among them are poor financial
management skills
He said 10 million credit cards had

been issued with only 30 per cent of

card holders able to meet the month

ly repayments
Card holders owed more than

An average of 41 Malaysians are

declared bankrupt daily with the
majority failing to repay their car
purchase loans
These figures were gathered and
tabulated by the Federation
of Malaysian Consumers Associa
tions Fomca as part of its
Financial Awareness Month pro
gramme
Fomca chief executive officer

Datuk Paul Selvaraj said RM560 1

billion in debts were not collected by
banks as of August last
year
He said car loans and

credit card debts were

among the top two

reasons why the coun
try s youth seek finan
cial counselling from
the Credit Counselling
and Management
Agency AKPK
According to AKPK s
statistics

individuals who sought

help were under 40
A significant 15 per
cent were youth in

about 60

per cent of the 9 000

RM24 billion he added

Perhaps it is because of the con

venience of credit cards that people
seem to prefer using them rather
than cash

Also credit card holders do not

feel the immediate pinch of emp

tying their wallets when they make a
purchase
It was reported that those who
used credit cards were more inclined

to spend 17 per cent compared with

those who used cash

Selvaraj said there should be con

trol mechanisms in the marketing of
credit cards

Regulators need to make sure

that marketing campaigns do not get
out of hand

Banks must issue them only to

customers who have

the capacity to service

their bills

He said on the spot

Headline
MediaTitle
Date
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Easy cash turns many into bankrupts

New Straits Times
14 Nov 2011
Local News
12,13
English
N/A
Daily

Color
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PR Value

Full Color
136,530
330,000
1153 cm
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credit card approval

Its director general Datuk Abdul

deals must be offered

Karim Abdul Jalil said it had be

only to those who were

truly entitled

come common among debtors to go

to any length to reduce or delay re
payment orders despite being de
clared bankrupt
Some of them simply cannot ac
cept the change in lifestyle that re
sults from bankruptcy
Many would attempt to reduce
their monthly repayments to a
miniscule RM30 or RM50 despite
owing hundreds of thousands of
ringgit

Banks need to make

sure they let the public

know of the responsi
bilities in using credit
cards

The contract

terms need to be trans

parent
He said within just
five years from 2005
some 4 400 individuals

had been declared bankrupt after fail

ing to repay their credit card debts
He said at present there were 3 2
million credit card holders with 60

per cent of them having an annual

income of less than RM36 000

Selvaraj also said debit cards were

not as popular as credit cards
Last year the average annual
transaction of a single credit card
was at RM9 338 while only RM141
was spent using debit card
Debit cards are better as con

sumers are spending their own

money

Others even resort to fraud such

as purchasing cars or property under

their relatives names

He said the department occasion

ally recommended to the court to
reverse a bankruptcy order within
five years if the individual proved
that he was committed to complet
ing repayment through good con
duct and cooperation
Unfortunately too many people
do not have that sense of respon
sibility
There have been 103 827

bankruptcy cases since 2005

of

which 12 929 cases were recorded

Perhaps it is

because of the

convenience of

i credit cards that

people seem to
prefer using them
rather than cash
DatukPaul

Selvaraj
Fomca chic executive
officer

They can t accept new status

IRRESPONSIBLE Those heavily in debt
must give up their luxurious
lifestyles and make repayment a pri
ority the Insolvency Department
said

from January to August this year

A majority 32 3 per cent of them
involved individuals aged between
35 and 44 Another 17 76 per cent
were between the ages of 25 and 34
A quarter 25 06 per cent of the
cases were due to hire purchase
loans on passenger vehicles
Karim said in today s society pur
chasing a car had become a necessity
rather than a luxury even among
those who could not afford one

It has become too easy

for someone to obtain a bank loan to

purchase luxury cars that they ac

tually cannot afford to pay for
Karim added that good financial
education for the young was nec
essary to combat a wider consumer
culture in general
More awareness on the deep and
lasting impact of bankruptcy on
one s life can help in teaching the
young to be more prudent with their
finances

Headline
MediaTitle
Date
Section
Page No
Language
Journalist
Frequency

Easy cash turns many into bankrupts

New Straits Times
14 Nov 2011
Local News
12,13
English
N/A
Daily

Color
Circulation
Readership
ArticleSize
AdValue
PR Value

Full Color
136,530
330,000
1153 cm
RM 34,106
RM 102,318

Headline
MediaTitle
Date
Section
Page No
Language
Journalist
Frequency

Easy cash turns many into bankrupts

New Straits Times
14 Nov 2011
Local News
12,13
English
N/A
Daily

Color
Circulation
Readership
ArticleSize
AdValue
PR Value

Full Color
136,530
330,000
1153 cm
RM 34,106
RM 102,318