I HOPE the government will decide against allowing contributors to withdraw Employees Provident Fund (EPF) savings to settle their credit card debts.
Right now, the EPF only allows a contributor to withdraw money in Account 2 (which makes up 30% of the total contributions) for health, housing and education. To ask for the EPF to further allow withdrawal from this pre-retirement category for settling credit card debts is absurd.
Replying to Senator Datuk Goonasakaren Raman in Parliament, who wanted to know whether the government allowed EPF saving withdrawal to settle credit card debts, Deputy Finance Minister Datuk Chua Tee Yong rightly said: “If there is demand to withdraw EPF savings for another purpose, we are worried it will affect funds for their retirement.”
If this is allowed, not only will people be asking for EPF withdrawal to repay credit card debts, they may also want to do so to pay just about any debt.
What most people who run up unmanageable credit card debt need most is to learn how to manage their financial resources and there is no better place to visit than the offices of the Credit Counselling and Debt Management Agency (AKPK), which can help them draw up a suitable repayment plan.
There is no need to be charitable to those who don’t know how to manage the frequency of swiping their cards.
If the government wants to do something to alleviate this financial woe, then make banks tighten credit card issuance even more.
Over the decades, the financial institutions have successfully promoted credit card ownership as a status symbol, so much so anyone who is qualified for a credit card will want to have one in his/her wallet.
How many who own one can sensibly use it without harm to their financial status is up to your guess.
If banks are lamenting about their credit card debts having gone bad, I wonder why some still send out hordes of youngsters to shopping centres to sign on more credit card owners.
And if you ever allowed yourself to be stopped by a credit card pedlar, you will realise that it is almost as easy as signing up for AAM (Automobile Association of Malaysia) membership.
Some of these young salesmen/women may even tell you that if you don’t like the card after signing up and getting a free gift, you could just cancel it. I have encountered some who were not shy in telling me that they were paid by the number of those they signed up.
Thirty years ago, you needed an introducer to have your credit card application approved. I recall how my peers were all excited about getting a credit card back in the late 1970s and 1980s.
Back then, to be able to flash your Amex or Diner’s cards was something not many people were able to, and to be able to own a credit card showed you were doing well.
When I applied for mine, a close friend who was the bank’s credit card manager had to persuade me for months. I had no interest in his offer because I had thought it was demeaning to use something on credit, signing away my purchases and pay for all at the end of the month.
Only when my friend argued that it was good to have access to emergency cash did I buy into the idea of having a credit card.
Even so, I did not use the card for almost a year because I was uncomfortable about buying something on credit when I had cash. And what little cash I had in the wallet at the time, would determine what I would buy.
Only when I started a family and the children came did I see the usefulness of having a credit card.
Instead of having a “Buku 555” in my pocket and noting down my purchases, I made the bank track my spending and send me an itemised list each month.
When the bill came, I had never accepted the bank’s kind offer to pay 10% of what I owed. I paid all and on time to avoid the late-payment penalty. Sometimes, I am surprised why they had not cancelled my card till this day.
Few banks would not fail to entice with an offer to increase one’s credit limit, and mine tried it with me, too. One year, they upped my credit limit and then notified me in a mass-printed congratulatory letter purportedly signed by the group manager.
They told me that in appreciation of my years of patronage, they were making my card even more “financially powerful” with the extended credit limit.
I immediately called the bank and asked for the old credit limit to be reinstated. I had seen the folly in treating the credit card as a status symbol, I told the girl on the other end of the line when she asked for the reason for rejecting the offer.
Gold or platinum cards, I said, were all plastic. Not handled well, they can be just as deadly in sending one to financial ruin.
Just last week, at the hypermarket, a young credit card salesman poked fun at my credit card when I told him it was the only card I had ever had in my life.
He had wanted me to sign on to a card from the bank he was promoting. I told him I only needed cash in hand, not credit limits. I wonder if he understood what I meant.