Finance or personal financial management is something we should all be in tune with and never more so if you are a credit card user. Its easy to go overboard on credit since its “free money” – not that I ever have since I have a morbid fear of living in debt but it happens to some.
It doesn’t help those of weak disposition too when credit cards are often offered “free for life” or “pre-approved”. Who can resist “free money” right? And then there’s all the different promotions available at dining or shopping places with only certain credit cards. The upshot of all this is that we end up with a whole bunch of credit cards – some we use often and others we flash only to get a discount.
In the 2010 Budget for Malaysia, the Government has imposed a service tax on credit cards – RM50/year for principal cards and RM25/yr on supplementary cards. Now, take out all the credit cards you own and tally up the total you’d have to pay for service tax. Ouch yet?
In my case, I regularly use credit cards from only 2 banks which I just realized gives most of the discounts I get or will want. I carry others for “backup” in case I make a gigantic purchase but honestly I’ve never even come close. On top of all that, I pay off the whole of my credit card balances every month no matter how staggering it is – its that fear of debt again.
So really, I’ve been meaning to get rid of all that useless plastic in my wallet but never found a valid reason to and now’s the best time! Without going into the merits or demerits of this tax proposal, I’m instead going to take this opportunity to streamline my credit cards – silver lining, why keep looking at the dark clouds?
For now, I’m going to cut it all down to just 1 Visa and 1 Mastercard since they seem to be the 2 most widely accepted cards worldwide. In fact I might just only stick to one and I doubt I’d be troubled. I’d also stick to just 2 International banks – the 2 I’ve been using all this while. Not only do I have a lighter wallet to carry around, I’d have less bill datelines to think about and less hassle when paying bills!
What might happen of course is that banks might be forced to absorb this extra cost when people start cancelling their credit cards wholesale (there are ways they can do it without incurring the wrath of the government). But I’m going to stick to my plan to streamline my credit cards anyway. After all, I’m not a heavy credit card user and I can live with just 2 cards max.
How about you? If you live in Malaysia, how do you plan to address this imposition of taxes on your credit cards? Force the bank to absorb the tax or stick to canceling your card anyway? If you live outside of Malaysia, how many credit cards do you think you really need?
You know what I think, now lets hear your thoughts!
Stay financially happy!