Sunday January 31, 2010 By JOSEPH LOH and HARIATI AZIZAN firstname.lastname@example.org
PETALING JAYA: Calls to customer care lines of all credit card issuers revealed issuers will not subsidise the RM50 service tax for credit card that came into effect on Jan 1 this year. Most credit card issuers, when contacted, declined to comment on the service tax issue. With the exception of Bank Kerjasama Rakyat Malaysia, which unconditionally subsidises the service tax, all credit card issuers impose specific conditions upon customers in order to offset the amount.
Most credit card issuers allow the amount to be offset with the cardholders’ reward points earned. However, the amount of points required to offset the RM50 is usually lower than a department store shopping voucher redemption of similar value.
Another mechanism offered is a RM50 cash rebate specifically tackling the service tax amount. It requires cardholders to utilise their cards – usually with a minimum value on transactions – to be entitled to the rebate.
According to a statement from Aeon Credit Service (M), the company has yet to see any behavioural change in card members after the announcement of the service tax. “Our credit card members’ recruitment has not been slowing down and we are still receiving encouraging number of applications despite the fact that new applicants are aware of the service tax imposed. “In principle, the service tax is to be paid by cardholder, who may also utilise reward points earned from using the card for the purpose,” the statement said.
Many credit cardholders have already started cancelling their surplus credit cards. In his blog, PJ Utara MP Tony Pua wrote that he made his choice for what to snip and what to keep based on the best cash rebate and reward point deals. Cash rebates is better than card reward points, he wrote, but do read the fine print before deciding.
Although many credit cards offer “up to” 2% cashback, he noted, “You’ll only enjoy 2% cash back for monthly purchases in excess of say RM6,000. Otherwise, for expenditure below that, you’ll only get cashback of not more than 0.5%.” He said to enjoy some cash rebates, card holders may have to forward balances and end up paying high interests. For reward points, he advised, look out for the card that offers the least amount of points to convert to a particular reward.