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!
Paris B
One visa and one master – that should be enough for most people! Though i must say that sometimes the offers / discounts some credit cards offer are quite tempting! :P
I’m terribly afraid of being in debt too, so i only have the visa and master from a certain international bank and i pay off my credit card bills on time.
As for the tax thing, i do think that its abit unfair to us who do practise discretion when spending on credit. If the purpose of the gov is to curb overspending via credit cards, then implement the tax only from the 2nd or 3rd cards onwards. Carrying cash around is not that safe ya know? :(
Hiya Jenn
Yeah I’m sticking to the credit card that offers me the best discounts/offers (for now) I must agree with you too about the unfairness of it – fingers crossed they see sense so we good pay masters don’t suffer :P
I’m very much like you. I settle my bills every month. I have 4 cards, but only carry 2 in my purse. And like you, I’ve been meaning to cancel all my cards and only keep 2. But still, having to pay the service tax for credit cards sucks. :(
Hi Aiyu
Yay! Settling bills every month is the only way to stay debt free! :)
I’ll be sure to cancel my M’sian credit cards when I’m back in Dec. I keep them in case I need to use them, but since I’m not even there 11 months of the year, I’ll just make do with cash. Better for me to not overspend anyway.
Over here (in Australia), I have just one credit card, and it’s definitely enough. Big stores like Myer and David Jones entice the public to get their store cards. No thank you for me. One less temptation, the better :)
Hi Tine
Lucky for us here store cards are mostly separate from credit cards hehe… I’m toying with the idea of just 1 card too. But I’m thinking that might be a bit constricting for travel
1 Visa & 1 Master, definitely. But both my cards r Masters, for some strange reason, so gonna get me a Visa soon.
Hi Deb
Actually, if you haven’t encountered problems, maybe a Visa isn’t all that necessary?
That’s right, looking at the positive side, it forces many of us to re-think our credit card habits and to maintain a healthy level of credit risk. I think we only really need one credit card.
Personally I only have 2 credit cards, and I plan to cancel one of them unless the bank is willing to subsidize my service tax (which I doubt).
If I could have your permission, I actually published a new blog post today.
A simple guide to cancel your credit cards in 4 steps:
http://www.adinochang.com/archives/4-simple-steps-to-cancel-your-credit-card.html
Hi Adino
Thanks for the tips. I’m keeping 2 mostly for emergencies and travel :)
2 is enough, i actually use just one to earn good points but a 2nd back up is good! And I go with your commenter Deb, 1 mastercard and 1 visa :)
Hi Nikki
LOL Looks like many of us the world over have the same idea!
I could not help to comment here about this issue. Like everyone else said, 2 CCs is enough. Agree w nikki said, one for backup, because sometimes the merchant could not accept the card due to server problem and u need a another cc backup to avoid unnecessary embarassment of cash shortage.
And for those who often travel abraod, perhaps could mantain one international bank cc (for time being, not all local banks are accepetable yet in other country lol).
But it doesnt matter whether both is master/visa or each of one (suit your preferences). Here’s few important tips maintaining which type of card:-
First, nowadays, there are many banks that offer annual fee free for life without conditions. Go for it.
Second, goes for cards that gives privilege benefits e.g. extra/frequent rewards like discount or rebates. Or points accumulation for cash rebate.
And final point, make sure it is convenience for you to pay off your cc bills (avoid paying w bank charges e.g third party bank via internet transaction or via bank’s draft).
With all these benefits, it will help to set back the service tax.
Hi Pearl
Thanks for your thoughts – I did hear that international bank cards are more acceptable overseas so I’ll be sticking to that.
I think just a single card is enough for me, the more the dangerous anyway :p and I think they should really be stricter with the applicants. Quite a few people that I know of are actually in debts of credit cards, and all of them have >= 3 cards.
Hi prettybeautiful
oh dear credit card debt is one of the worst! The interest rate is so high and its compound interest too!
I don’t have a credit card, but I do have two Visa debit cards – one linked to one account that I try not to use (can’t shop online with it anyway), the other I have to load money into that is also my registered card on Paypal and shop online with. I don’t quite trust myself with actual credit cards :P
I haven’t encountered too many vendors that don’t take debit, but luckily for those times I either pay cash or don’t go through with it (like the local iTunes store).
If one must have a credit card, Visa is more widely accepted; of course it also never hurts to have a Mastercard for what privileges that seem to crop up during Mega Sale..
Hi Synical
I have a bit of a paranoia when it comes to debit cards but otherwise yes debit cards or the Visa Electron card is an option to credit cards. :)
I am very much like you Paris.. I am a good paymaster as I do not wish to be in debt ;)
I have one Visa card and one debit card ;) I get annual fee waiver from the bank on my Visa card (one simple call to request~once a year thingy..LOL), but if the bank is not willing to absorb the said service tax, I will also opt to cancel my Visa card :P
So now I have a very good excuse to request for cash advancement whenever any country calling me as I travels frequently LOLL (I hope my boss won’t stumble here :P)
Anyways, let’s wait and see what are the new schemes from the banks ;)
Hi Ant
LOL I get the annual fee waiver too so its never been an issue but I still think at least 1 credit card is a necessity these days. I’m adopting a wait and see attitude too for one or two cards – we have till December ;)
This is a good incentive for me to cancel my dormant credit card accounts! :) Otherwise like you, PB, I’d never get around to doing it since they’re free for life anyway. :D
Hey Rinnah
LOL I have a few of those too! Dormant cards I mean – I don’t even know why I have them :P
no credit card for me XD cuz i am just a student
if really need one in future, probably just one card
Hiya Eliza
Hehe… perhaps by then they have removed the tax ;)
Haha! My boyfriend and I make it a point not to have credit cards from the same bank so that we can maximize on the benefits. I currently have a visa and mastercard as well as the obligatory debit/atm card. My mum gave me a pair of sup cards a while back before I went overseas to study. “For emergencies” she said ^^ I still hang on to them cos it’s impressive to swish out the platinums at snobby sales people. I’m terrible aren’t I? ^_^;
I cannot imagine living with a credit card. A Mastercard and an AMEX are all I have/need. I got the Mastercard because AMEX isn’t as popular in Malaysia as it is here in Europe. I always pay my bills on time. I have a budget how much I can spend every month. There are times when I’m out of control (like on vacations or on business trips *lol*) but I make sure I do not go over my budget ;)