Monday, October 20, 2008

Credit Cards and Sub-Prime

Nothing to worry over credit card over-spending.

The bad loans are already factored into the interest rate - that's why you pay 10-12% pa on credit card as opposed to 5-6% pa on normal loans.

Credit cards are small loans, and it is cheaper to write them off than litigate for recovery.

I have not seen credit card debts doing much damage to banking institutions - although individuals are known to get into trouble.

But it is always a sign when banks are keen to give out credit cards that the end is nigh for the economy - they are really going for the sub-prime customers.

2 comments:

ctchoo said...

Good clarification. Where are the chinks in the armour of the Malaysian economy?

ben said...

Hehehe! Spot on, couldn't agree more with you.