MORE than 1,800 people spent their way into bankruptcy last year.

Prime Minister Datuk Seri Abdullah Ahmad Badawi said the 1,873 bankruptcies were caused by credit card usage.

He noted that the number of such bankruptcy cases has been on the uptrend since 2004 when 1,397 cases were recorded.



The number rose to 1,479 in 2005 and 1,656 a year later.
However, Abdullah said debts due to credit card usage was not at a critical stage despite the increasing number of people using it as the preferred method of payment.

He said as of February, total credit card expenditure only made up 3.5 per cent of the total banking financing.

Of the outstanding amount of RM23.3 billion, 89.3 per cent or RM20.8 billion is categorised as current balance. RM2 billion is outstanding balance of no more than three months while 2.3 per cent or RM500 million is either non-performing loan or outstanding balance of more than three months, he said in his written reply to Liew Chin Tong (DAP-Bukit Bendera).



He said on average, 30 per cent of card holders paid up their outstanding balances every month while nearly 60 per cent paid the following month.



He said Bank Negara encouraged the use of debit and prepaid cards as an alternative payment instruments.

"Local banking institutions are in the process to upgrade their credit card terminals to ensure that it can receive ATM cards.

"This will enable 15.4 million ATM holders to use their ATM cards to buy goods," he said.

He also said that of the 5.6 million credit card applications received by credit card institutions last year, only 2.8 million or 49.7 per cent were approved.

"This shows that the issuance of credit card is not arbitrarily done, contrary to public perception."