Consumers needs education on credit card usage
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)