Think again before you say 'charge it'<\/p>\n
By Emmy Fitri<\/p>\n
JAKARTA (JP): As retail outlets tempt with a growing array of
\ncharge and debit cards, the Indonesian Consumer Foundation is
\nwarning consumers to be prudent.<\/p>\n
Foundation vice chairman Agus Pambagio said recently that
\nresults of an ongoing survey into credit cards would be made
\npublic in October.<\/p>\n
"We are also monitoring charge cards and debit cards (like
\nKualiVa membership cards) as they are new products," he said.<\/p>\n
The foundation, also known as YLKI, had received no consumer
\ncomplaints about the new products, which are offered by the
\nretail outlets in conjunction with banks.<\/p>\n
But he warned consumers to "be rational in your spending
\nneeds".<\/p>\n
The foundation has received 26 complaints this year about 10
\ncard issuers, only half of which have been settled. Allegations
\nof unscrupulous practices by collection agencies -- including
\npeople claiming to represent banks throwing stones at a debtor's
\nwindow -- are tackled by police.<\/p>\n
Other complaints included the charging of annual membership
\nfees by the issuers even though a person had requested
\ndiscontinuation of card privileges; extension of credit card
\nmembership without cardholder's approval; and debiting of a
\nbilling fee before distribution of the card.<\/p>\n
There had been no follow-up to an earlier attempt at involving
\nsome banks in a working group on credit cards with YLKI, he
\nadded.<\/p>\n
Complaints, he said, had been "frequent" since credit cards
\nentered Jakarta in the 1980s. The foundation's calls for all
\ntypes of plastic money to be regulated had received an inadequate
\nresponse, he added.<\/p>\n
Many local consumers, Agus said, lacked understanding of
\ncredit cards, which was further complicated by the many
\nfranchising practices and partnerships between foreign and local
\nbanks.<\/p>\n
While Agus agreed plastic money was aimed at making life
\neasier and safer, he questioned why banks seemed to have waived
\nmany screening procedures.<\/p>\n
"It becomes troublesome when marketing is out of control, and
\nit's dangerous, simply because the card issuers do not have fixed
\nand clear criterion for their target consumers," he said.<\/p>\n
There were ways to subvert the basic salary requirement "as
\nlong as we (ask for help) from the finance people in our
\noffices".<\/p>\n
He said banks did not verify the data on applications by
\nrechecking with applicants' offices.<\/p>\n
"These things happen as we don't have a legal institution, a
\nkind of 'credit watch' like in the United States and other
\ncountries," Agus said.<\/p>\n
Danger<\/p>\n
The danger is that cardholders often do not possess the
\nfundamentals of balancing their expenses, eventually winding up
\nin trouble.<\/p>\n
"They use the credit card and do not really understand how it
\nworks, and are soon trapped in debt," he said.<\/p>\n
Agus described marketing practices and commercials as
\n"dangerous" and "horrifying" in light of the lack of a regulation
\nor thorough screening. "Banks should not rush (their
\nmarketing)..our consumers are not ready yet."<\/p>\n
He said many cardholders do not understand the basic formula
\nfor calculating their bills or interest on the cards. Studying
\nthe fine print is important.<\/p>\n
"Our people are vulnerable to (promises of advertisements),"
\nhe said.<\/p>\n
With commercials boasting new products offering complete
\nservices and loan interest rates, people are lining up to apply.<\/p>\n
Agus said most consumers here did not understand
\nthere were two mechanisms used in affixing interest, which can
\nreach 5 percent.<\/p>\n
"One is based on each transaction and the other is according
\nto the total accumulated transactions counted at the closing
\ndate." He added most banks here use the former method.<\/p>\n
The ideal cardholder should earn at least Rp 2 million.<\/p>\n
Despite the attractions of debit cards, Agus reminded shoppers
\nthat the charges that would have been made in cash were taken
\nimmediately from the debit account.<\/p>\n
The foundation's concern about the marketing of cards included
\ndepartment stores and trading companies, which Agus said should
\nbe under the supervision of the Ministry of Finance.<\/p>\n
Following complaints from credit card users, the foundation
\ndrafted guidelines on their issuance with Bank Indonesia, the
\ncentral bank, in the early 1990s.<\/p>\n
"There was no follow up and suddenly the Banking Law was
\nissued in 1992," Agus said, adding there was no clause on
\nconsumer protection in dealings with banks.<\/p>\n
"We have always urged the government to prepare an
\ninfrastructure for the emergence of credit cards, but so far no
\naction has been taken."<\/p>\n
The foundation can only assist consumers by contacting the
\ncard issuers.<\/p>\n
The gains for banks are hard to detect, he said, but include
\nthe monthly administration cost and taxes charged to consumers'
\naccounts.<\/p>\n
"Consumers mostly ignore these facts," Agus said.<\/p>\n
Before you say "charge it", consider these tips for making
\nprudent noncash purchases:<\/p>\n
* Set your priority scale and buy necessities first. Needs and
\nwants are two entirely different things.<\/p>\n
* Limit plastic money transactions to 30 percent of your income.<\/p>\n
* Always take into account the interest incurred on your charges.<\/p>\n
* Paying credit cards by account transfer is preferable up to
\nthree to four days before the deadline. After that use cash to
\navoid unnecessary charges.<\/p>\n
* Only take cash with credit cards when really needed, to avoid
\ninvolved costs.<\/p>\n
* Having one card is enough to make life convenient if used
\nproperly.<\/p>\n
* Scrutinize offers for charge cards. You don't have to go to a
\nsupermarket just to buy a pin for the sake of collecting points.<\/p>",
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