Friday, August 27, 2010

Misuses of Credit Card..

Let's share with people out there for my group project assignment about the misuses of credit card instead credit card is an advantage for us to bring it easily and bought modern type of business transaction.


Credit card has become so entrenched in today’s modern living that most people have at least one credit card. The credit card industry is booming and becoming very competitive. Banks are aggressively promoting their credit cards by offering attractive promotions for credit cards with endless benefits and discounts. With the ease of applying and obtaining a credit card more and more people using credit cards for purchases than cash.

Nevertheless, the question to ask is “Credit Card – Is it a convenient tool or a debt trap for a consumer?”

With a credit card, one does not need to carry large amounts of cash nor would one be likely to end up in an embarrassing situation where you do not have sufficient cash to pay for your purchase. The public however must remember that using a credit card to buy carries and obligation to pay. Therefore, credit cardholders should always ensure that all transactions charged to the card are within one’s capacity to repay when due.


This report is about the abuse of credit cards among Malaysians. In this generation, most of people tend to use credit card for their luxurious lifestyle. Through the observation, discovered that majority numbers of peoples preferred using credit card rather than cash especially in shopping complex and most of the place offers credit card service.

Everything has pro and cons, so does credit cards. For the cons of credit cards, sometime people overlook whereby they use the credit cards for their luxurious lifestyle. The people begins to regret with their obstructive attitude when comes at the time when they struggle paying their monthly bills.


The objectives of this report are to:
1.2.1. To investigate the purpose of using credit cards
1.2.2. To find out the amount they spent on their credit card each time
1.2.3. To find out the total amount of money spent to pay for credit card bills
1.2.4. To identify causes of misused credit cards
1.2.5. To recommend solutions to the problems of credit card abuse


In order to determine why people misuse the credit card this report takes into consideration the following factor:

1.3.1. To make people realize the effects of the abuse of credit cards.
Most of the people do realize the effect of the credit cards but still they use it. Our finding will show what we mean here.

1.3.2. Total numbers of people who have become bankrupt because of credit cards
Based on statistics below, provided from Bank Negara Malaysia from the year 2001 until 2005, total credit card bankruptcies increased tremendously (Figure 1).
By 2009, this figure has already soared very-very much higher.
Credit Card Bankruptcies (Million)

Year Credit Card Bankruptcies Amount Involved (RM million) Total Bankruptcies % of Credit card Bankruptcies to Total

2001 952 23.3 11,685 8.1

2002 1,117 28.2 12,268 9.1

2003 1,152 33 12,351 9.3

2004 1,397 38.7 16,251 8.6

2005 1,479 44.4 15,868 9.3

Total 6,097 167.6 68,423 8.88

Noted: Refers to individuals declared bankrupt
Source: Bank Negara Malaysia


The information for this report was obtained through survey in which 64 questionnaires were distributed to PLK students IS 221 of UiTM Shah Alam which are working and to the private and government sector worker. The questionnaire was distributed randomly.

Observation were also conducted by looking or observed in shopping complex to know total percentage of people using credit cards to pay their shopping bills rather than cash.

1.4.1. Questionnaire
The questionnaire was dividing into 10 questions consist of personal information of the respondent. This questionnaire also require respondent to answer why they use credit cards.

1.4.2. Observation
The observation was done at Jusco IOI Puchong which took 1 hour at two different counter and level to observe the percentage of people using credit cards when pay their expenses. During that period, total of 25 people been observed. The main objective of this observation is to enhance our statement in misusing credit cards among Malaysians.


Data obtained from the questionnaire survey and observation were collected and analyzed. Frequency counts and percentages of the data were computed using the SPSS system.

A discussion of the findings of the study is presented in the next section.


This section will present the findings of the survey.

2.1 Questionnaire Response

A questionnaire was distributed randomly to the students at every faculty in UiTM. A total of 64 respondents took the trouble to fill in the questionnaire. The following is the discussion on the findings:

2.1.1 Of the 64 respondents who answered the questionnaire, 57% (37 respondents) of the respondents were female while the rest, 43% (27 respondents) were male.

2.1.2. In response to the question on the credit card holder, it was found that 23.8%% (16 respondents) were professional, 52.4% (34 respondents) were semi professional, 23.8% (14 respondents) were others which is including clerical position, insurance agents, businessperson and etc.

2.1.3 Out of 64 respondents, 68.75% (44 respondents) owned credit card whereby 31.25% (20 respondents) did not owned a credit card.

2.1.4. From the below chart, 29% (18 respondents) used their credit cards to pay bills and petrol followed by 24% (15 respondents) which used their credit cards for their travelling expenses, 22% (14 respondents) which used their credit cards for shopping, 18% (11 respondents) and only 7% (4 respondents) used their credit cards for other purpose.

2.1.5. From the response of the 44 respondents who owned credit cards, 56.81% (25 respondents) pay the minimum amount of payment for their credit cards, 22.72% (10 respondents) pay the total amount of bills and the other 20.45% (9 respondents) pay others amount of payment depend on cash and some 10% to 20% more than minimum payment.

2.1.6. Total of 44 respondents use credit cards, 40.91% (18 respondents) used RM201-RM500 monthly. This followed by 27.27% (12 respondents) used RM101-RM200, 22.72% (10 respondents) used below RM100 and 9.09% (4 respondents) used their credit cards above RM501 monthly.

2.1.7. Of the 64 respondents who answered the questionnaire, 31% (19 respondents) suggest use only cash to avoid the problem of credit card abuse among respondents, 29% (18 respondents) recommend that never own credit card as a solution, 15% (9 respondents) suggest the use of debit card.

2.1.8. It was found that majority of respondents used credit cards for their bills payment or petrol, travel and shopping which lead to the credit card abuse. Even though they realize that using cash is the best way and they should never own credit cards to avoid them to misuse their credit cards.

2.2. Observation
An Observation has been done on 21st March 2009 at Jusco IOI Puchong. This observation was done at 2 different counters and level at the same time which only took 1 hour (2pm until 3pm).

2.2.1. Total respondent using credit card rather than cash to pay their shopping expenses.
From the observation, found that majority people use their credit cards to pay their shopping expenses. For both Counter 4 and Counter 5, total 0f 53.85% (7 people) and 66.67% (8 people) of people use their credit cards instead of only 46.15% (6 people) and 33.33% (4 people) use cash to pay.

2.2.2. Based on the observation, we found that 68% of people using their credit cards to pay their shopping expenses instead of cash which only 42%.


Based on the findings of the study, it can be concluded that most of the respondent aware of Credit Cards abuse if they misuse it. Many of the respondents or people agreed that avoiding the misuse of credit card is only by using cash, if possible try not to own a credit cards and if they anxious of their safety wise in keeping cash, debit card is one of the solution.

Even though the purpose of people own credit card actually for emergency purpose but based on our research, found that more than 60 percent of respondents use their credit card for bills payment and petrol, travel and shopping purposes. Unintentionally by using their credit card for those purposes, they may abuse the usage of credit cards.

From this research, through our observation, the percentage of bankruptcies increases yearly and it mostly due to abuse of credit cards whereby in this century this credit cards have been use for materialistic purposes and not for emergency purpose.

In conclusion, in this century the abuse of credit cards is increasing tremendously yearly, consequently we think that credit card is not necessary to be used.


It is the recommendation of this study that the following proposal be implemented:

4.1. Banks should tighten their guidelines/policy in the place on granting of credit card to customers and use leading edge technology tool and techniques, which include bureau checking and other credit verifications before an application is approved.

4.2. Customers who use credit cards need to use them wisely and prudently.

4.3. People should learn to develop the habit of paying bills when due without incurring late charges or interest.

4.4. People must train themselves to avoid using credit cards or apply for it.

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