First let me say, I think it’s a gr8 thing in principle that the Government is doing something at last to make it more difficult for those who really shouldn’t have a credit card from having one and the banks — whether out of stupidity or greed — from seducing people who shouldn’t go into debt with soft baits aplenty at shopping malls, MRT links or wherever there are crowds.
This said, I wonder if the less well-off will be disadvantaged by the slew of tightening measures announced by the Monetary Authority of Singapore earlier this month and which will kick in over the next 21 months, starting from December this year?
Let me explain, using self as an example.
I have four credit cards, from two banks. I always pay my credit card bills on time. I don’t pay any fees for any of my cards, even though I think it’s a pain to get the annual fee waivers.
I also get points whenever I pay with my cards and that allows me to redeem perks.
I redeem my points for vouchers that allow me to get $20, $30 or $50 off my bills at certain restaurants or shops.
I get to pay less for petrol if I use the stations affiliated with the bank issuers, and I always do.
One of my cards even allows me to eat lunch at three restaurants at the Grand Hyatt at discounts of as much as 50% off the bill, depending on the number of people I have with me.
Given the array of “perks” I always use credit cards where possible. For example, recently when Fairprice was promoting credit cards using the “wave” technology with one free Fairprice housebrand loaf for each shopper who charges at least $30, I got so many loaves over the promotion period that I had to give them away to the condo’s security guards and cleaners!
On top of everything, I get up to about 30 days of free credit on average. If I use my card with a greater eye on the calendar and the billing cycles of the issuers, I might get an even longer stretch. But I think the extra days aren’t worth the trouble of being selective with my cards.
Yet despite using plastic to pay 80+% of my monthly expenditure — would be 100% if mum’s helper will accept her pay via credit card — I am never anywhere near my credit limit of $22K for my 4 cards.
So earlier this year, I went to one of the banks and did what was considered unheard of: asked for my credit limit to be reduced.
The staff who dealt with me was so flummoxed that she asked me to write my own letter requesting a decrease in credit limit. The bank only has standard forms requesting increases in credit limit
From my short ramble, it should convince anyone reading this far that credit cards have their obvious privileges. But the not so obvious downside is that the merchants involved in the credit card network would have, must have, priced in the credit card facility into their goods and services.
It wasn’t my meditation on credit card use that gave me the Eureka moment. Instead it was the Kopitiam store value card which I got some time ago, attracted by the 10% discount offered by the stalls in Kopitiam food courts.
Over the almost 2 years I have had the card, I have enjoyed some $70 worth of discounts (based on 10% of my to-date expenditure which is shown every time I top up) and I don’t even eat at a Kopitiam outlet more often than two or three times a month.
Imagine those who do, especially the lower income? How much such savings would help them to stretch their meagre dollars!
Yet the people I see most often using Kopitiam cards to pay for their meals at the food court are invariably young executives, students and fairly OK-$-wise uncles and aunties, like myself.
Those who pay cash are invariably cleaners, security guards and other menial earner types.
I often wonder whether it’s because they don’t know how to work the store-value top-up machines. Or more worryingly, they can’t afford to pay the cost of the card: can’t remember how much, $2 or $5 every two years that Kopitiam charges to extract the 10% discount from its stall-holders.
Which brings me back to the credit card conundrum. Those who have them enjoy perks that would surely have been priced into the goods and services they buy.
Which is unfair to those who pay cash, especially those who have no choice but to pay cash — because the laws don’t allow them to have even one, let alone several.
Why should those who don’t enjoy the privilege and the convenience of credit and the discounts and perks that come with a credit card not be allowed to enjoy discounts when they pay by cash?
Credit card companies frown on this. Indeed bans its merchant network from giving discounts to those who pay cash instead of using their credit cards.
I think this should change. And if the credit card issuers refuse to undercut their own business by promoting cash payments, then it’s up to the Government to do something to level the paying field for the poor.
Make it mandatory for merchants who take cash and credit cards to give discounts to those who pay in cash. (Of course this won’t apply to those merchants who deal strictly in cash only!)
And if MAS is chary of tackling the powerful banks and other card issuers like American Express and Diners Club, then it could perhaps start with Kopitiam?
After all, those who patronise Kopitiam foodcourts would by and large be less affluent than those who qualify for credit cards, even be4 the more stringent credit rules kick in later this year.
Isn’t it the Government’s job to ensure that the less well-off have as much a level paying field as possible?
So why not tell Kopitiam that it should issue its cards to everyone without charge so that all — especially the less well-off — can enjoy the food discount?
This is a win-win situation for Kopitiam and its card-holders for every time they top up, Kopitiam enjoys a free float till they spend the money on their food.
In addition, the cards enable Kopitiam to manage its food stall tenants better by tracking their takings via the cashless system whereas cash takings are more difficult to track, which makes it attractive for the operator to encourage more to go cashless.
I rest my case. Now over to the new breed of PAP Ministers who all have big hearts for Singaporeans, especially the more disadvantaged!