travelphotatoes

Cut lah!

Sudah potong kah? You know lah.. cut already? I already cut mine. Feel so good ohh.. Well, certainly! There are many reasons to feel good if you cut it.

Annual fees before cut: RM3165.00
Annual fees after cut: RM1041.00
——————————————-
Savings after cut: RM2124.00 or RM177 per month!

And yes, those are annual credit cards fees after cancelling and cutting them up, throwing them away in pieces. We did have large collection of favorites cards; thankfully without any outstanding balance attached.

You would probably agree with us that if used smartly, credit cards can be our good friends that provide a lot of savings! We’ve actually enjoyed some benefits from these cards especially on cash rebates and discounted pricing with networks of merchants; not mentioning the popular zero interest balance transfers. Unfortunately, the government has a different take on this.

Effective Jan 1 2010, the government has started imposing RM50.00 credit card tax on each principal card and RM25 on each supplementary card. The reasons: governments wants the rakyat to be prudent on credit card spending and that the government is very concerned about the amount of credit card debts — in addition to getting additional sources of tax income (yes, a few hundred millions counts!)

Really? Our take: if the government wants to reduce the credit card debts; they should provide stricter regulations on the min requirement to apply for credit cards rather than taxing the whole lot. How much money are they gonna get from this tax? A lot? maybe not much, but seems like anything that goes in is good during this time.

Our PM did offer something:

“They are getting the RM1,000 tax relief and those paying tax at 27% will now pay 26%. “So, they get two (relief measures) and only have to pay RM50 (per credit card). Don’t tell me they cannot pay RM50?”

Well, not all credit card users are enjoying that tax relief and it’s not RM1000 across the board.  Hmm.. isn’t it that personal income up to RM2500 is not taxable and even if you earn RM1500.00 per month; you can still get credit cards? Btw, an article by SP is rather quite detailed:

Does this RM1000 tax relief really help Malaysians? Lets do some calculations… For example, I have 2 banks’ credit cards (both MasterCard and VISA). (This is very common to all Malaysians, some have even more than 10 principal credit cards). So I need to pay 4 x RM50 credit card service tax, total == RM200. And I am in tax range of 13% which mean that I can only get RM130 back from RM1000 tax relief. In the end, I need to pay RM70 (RM200 – RM130) more back to Malaysia government. So who is benefit from this? Malaysia government or Malaysians?

When we cut up our cards – that has given us another savings of RM450! Certainly, it’s our way of supporting one of the government’s reasons for imposing the credit card tax on the users: to be prudent on credit card spending.

So, which cards would you cut?