Credit card holders to spend more on bill payments<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
Credit card holders may have to start setting more aside next
\nmonth in order to pay their monthly accounts, along with their
\nother regular expenditure that has risen due to the recent surge
\nin inflation.<\/p>\n
This is especially true for those who usually pay only the
\nminimum-allowed amount on their accounts, as credit card issuers
\ngear up to fully comply with the central bank's requirement for a
\nminimum monthly repayment of at least 10 percent of outstanding
\ndebt by December.<\/p>\n
\"I guess I'll have to start spending less with my credit card
\nthen, or I may not be able to afford to pay all my debts,\" said
\nCindy, a 27-year old who will be among those affected by the new
\nregulation.<\/p>\n
Cindy, who earns about Rp 3 million (US$300) a month, can run
\nup a credit card bill of some Rp 5 million each month -- once,
\neven Rp 10 million. As a marketing employee, Cindy needs good
\nclothes when meeting up with her customers.<\/p>\n
With the previous minimum payment of 5 percent, Cindy usually
\npaid about Rp 250,000, before paying up the rest of the bill
\nlater on a monthly interest rate of 3 percent when she got some
\nextra money.<\/p>\n
\"But if the minimum payment is now set at 10 percent, then
\nI'll have to pay at least Rp 500,000,\" she said.<\/p>\n
\"Meanwhile, I still have to pay the rent, my phone bill, and
\ninstallments on a house I am buying on credit. Prices have also
\ngone up lately, so I really have to watch my spending more
\ncarefully from now on, or expect a debt collector to come
\nknocking on my door.\"<\/p>\n
On concerns that the unsecured nature of credit cards might
\nraise the banking sector's level of non-performing loans, the
\ncentral bank last year issued Regulation No. 6\/30\/PBI\/2004 on
\ncard-based payments, requiring every credit card issuer to set a
\n10 percent minimum monthly repayment as part of their risk
\nmanagement scheme.<\/p>\n
BI has given a one-year tolerance for card issuers to comply
\nwith the regulation, before imposing such sanctions as revoking
\nlicenses to issue credit cards.<\/p>\n
Credit cards have lately experienced a boom, reaching some 7.5
\nmillion at present around the country, and are used for some 12
\nmillion transactions worth up to Rp 30 trillion per year,
\naccording to the Indonesian Credit Card Association (AKKI).<\/p>\n
Apart from strong demand, the rapid growth is also due to
\naggressive marketing by card issuers, who offer easy application
\nrequirements, relatively low interest rates and low minimum
\npayments, in order to net new card holders.<\/p>\n
The downside, however, is the level of non-performing credit
\ncard loans, now standing at about 5 percent, leading to BI's
\nregulation and an additional burden on credit card holders who
\nhave been enjoying the low minimum payments.<\/p>\n
Not all credit card holders, however, are as worried as Cindy.
\nMany, in fact, do not care about the rise, as they usually pay
\ntheir bill in full, like Karlin, a 25-year old, who even has two
\ncredit cards.<\/p>\n
\"The total bill for both my cards is usually just Rp 500,000,
\nso it won't matter much if the minimum payment rises,\" she said.<\/p>\n
\"I don't like not paying my bill in full anyway, because I
\nknow I'll then be charged interest. I also use my cards just
\nfor emergency expenses, like when I'm short of money when on a
\nbusiness trip abroad.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/credit-card-holders-to-spend-more-on-bill-payments-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}