Consumers needs education on credit card usage
The Jakarta Post, Jakarta
As a young professional who has been working for only two years, Dewi, a manager of a small bookstore here has three silver credit cards placed neatly inside her wallet.
"I have lots of needs that I cannot cover with cash," she said explaining why she has more than one credit card, citing entertainment expenses and electronic gadgets to equip her room as among those needs.
These days however, with her spiraling debts, she regrets applying for more than one credit card, as she can only manage to pay the minimum amount required out of her total debt.
"What scared me the most was when a bank debt collector came to my house," she recalled.
Such a phenomenon is common nowadays, notably in the urban areas. Recent data shows that the number of credit cards has reached 7.5 million, with a total of 12 million transactions taking place per annum worth up to Rp 30 trillion.
Of the total, the non-performing loans currently reach about 5 percent.
Indonesian Credit Card Association (AKKI) chairman Budi Setiawan projected an increase of 20 percent in credit card holders this year.
The soaring number of credit card holders is attributable in part to the robust demand, in addition to the fact that most card issuers -- mostly banks -- are seemingly eager to offer various attractive incentives to net new card holders. Easier application requirements, relatively low interest rates and a low monthly minimum payment charge, are all among the benefits offered.
Unfortunately, consumer complaints have also been increasing in tandem with that.
The Indonesian Consumer Foundation (YLKI) said that numerous public complaints in relation to credit cards have been reported, with the number on a steady rise and debt collecting problems topping the list.
"Debt collecting activities are not stated on the initial contract signed by card holders," (YLKI) chairwoman Indah Suksmaningsih said.
"We felt the need to mediate between banks and their consumers to solve problems concerning credit card usage by campaigning about the handling of consumer complaints," she said, referring to a plan by the foundation to collectively report all complaints from credit card holders YLKI has received to Bank Indonesia's credit bureau.
The campaign, to be conducted in cooperation with the central bank, would start on March 1 and continue until May 15, Indah added.
Bank Indonesia director of accounting Mohamad Ishak said last week that the credit bureau would act as a mediator for both parties.
"BI will also urge banks to set a minimum monthly payment of credit cards at 10 percent of the total bill," he said, adding that not many card holders realized that the multiple interest on their total debt would in the end accumulate to a huge amount.
Aside from providing a mediation board, YLKI and BI also plan to set up a mechanism by which banks, and other card issuers, will provide informative messages for consumers to use their credit cards wisely.
"Sometimes it is not clear whether the banks are educating their customers or merely promoting themselves," Indah said. She added that sometimes banks issued credit cards to people who do not have the financial resources needed to own one. (003)