Bank Negara Malaysia wishes to announce the introduction of a tiered pricing structure for credit card users to promote the use of credit cards as a payment instrument. This is part of Bank Negara Malaysia's continuous efforts to promote prudent financial management and inculcate good financial discipline among credit card users in Malaysia.

On average, one-third of credit cardholders use their credit cards as a payment instrument, settling their credit card outstanding amount in full every month. More than half of cardholders pay at least the minimum amount due promptly and roll over the remaining balance. For the benefit of credit card users who have a good track record of settling their credit card balances which are due each month, promptly for 12 consecutive months, the finance charge will be reduced from the maximum of 18% per annum to not more than 15% per annum. The ceiling rate of 18% per annum will still be applicable for other cardholders.

Credit card issuers will begin to track the repayment behaviour of their cardholders with effect from 1 July 2007. The details of the new scheme, including the finance charges and its calculations, will be communicated by individual card issuers. The tiered pricing structure will be implemented by 1 July 2008.

Bank Negara Malaysia also encourages debit cards as an alternative payment instrument. The domestic banking institutions are in the process of upgrading all credit card terminals deployed by them to accept their ATM cards. The exercise, which is expected to be completed this year, will enable the 15.4 million ATM cardholders to use their ATM cards to make purchases at participating merchants.

The greater use of these payment cards is part of Bank Negara Malaysia's drive to accelerate the migration to e-payments. Bank Negara Malaysia and the financial industry will continue to implement initiatives to promote e-payments.