MANY swipe without thinking, unaware of the risks of being blacklisted or declared bankrupt for failing to pay their credit card debts. This is the general consensus of consumer groups on the alarming number of credit card users below the age of 30 who were blacklisted and later declared bankrupt due to credit card debts.

National Consumer Complaints Centre chief executive officer Muhammad Sha’ani Abdullah said the manner in which some financial institutions acted when it came to credit card applications was unethical.

“Credit cards are approved for anyone earning a high income. Any young person without a bad history, even without a job, is able to obtain a credit card and this is a very unethical way of conducting business,” he said.

Sha’ani said not all youngsters were aware of the repercussions of unsettled debts as the information available to the public on this aspect of credit card use is not easily available.

“How many out there know that even applying for a telephone line is impossible when one is declared a bankrupt? Sometimes you also get people applying for more than one credit card because of the habit of collecting cards which come in various interesting designs.”

Sha’ani said such form of marketing is a tool used to prey on the weaknesses of people. He said some merchants are also to be faulted for splitting the charges of their customers’ purchases.

“There are some people who are offered time-sharing packages which may cost RM40,000 but their credit card only allows a maximum expenditure of RM10,000. What happens is that these merchants will tell their customers that they are able to apply for other credit cards for the buyer,” Shaani said.

“Banks set a cap on spending based on a person’s earning power and what these merchants do is to come up with split charge terms to get their payment.”

He said that although banks were aware of the practices of some of these merchants, it was the customer who would suffer at the end for falling for the merchants’ advice when they are faced with a debt of RM40,000.

Sha’ani also commented about some banks that offered credit cards to those who do not have a job. Here, a copy of a diploma or degree certificate, or even an offer letter for employment, is used as the prerequisite to apply for a credit card.

“My view is that any principal without a job should not qualify for a credit card. However, it would be different if it were a supplementary card,” he added. For the Muslim Consumer Association of Malaysia (PPIM), being blacklisted affects the ability for anyone to own any assets or equities in the near future.

PPIM project director Noor Nirwandy Mat Noordin said that the present module of credit card approvals seemed to be very easy. “We are not so concerned about one being declared a bankrupt as the position is not irreversible but we are concerned over the fact that many young executives today are being blacklisted due to their inability to settle bad debts.

“No matter how much is said by consumer groups and the people out there regarding credit cards, banks seem to work in isolation.” Noor Nirwandy said there were many young executives out there who lacked financial management and some of them got trapped in debts.

“The first thing a fresh graduate who gets a job wants to get is a name card, followed by a credit card. Credit card advertising in the market often portrays that owning a credit card is prestigious. There is no balance, nor are the negative effects of credit cards being shown out there.

“Bad debts can make it impossible for a person to later own a car and a house and these can lead to marital problems,” Noor Nirwandy said.

He also feels that though many were against the way in which credit cards are being offered by banks, it seemed to be accepted by the government. He said it was time the government started taking the matter seriously as more and more people are getting trapped with debts from credit card usage.