Credit card default cases up

Credit card default cases up

JAKARTA (JP): Credit card defaulting has increased
substantially in the wake of the deepening economic turmoil, the
Indonesian Credit Card Association has said.

Association chairman Malik Habir said yesterday the extent of
the defaulting -- payment delayed by more than 30 days -- had
risen to 14 percent of the Rp 2.41 trillion (US$185 million)
total outstanding volume from the 10 percent figure before the
crisis.

"The average outstanding balance is currently Rp 1 million
($76.9) per card," Malik said.

There are 2.41 million cardholders in the country, with
outstanding accounts totaling Rp 2.41 trillion.

The increase in missed payments has forced the card-issuing
banks to take extra care when collecting bills from customers so
that the number of nonaccrued bills remains at the normal rate of
1 percent to 2 percent, he said.

"They arrange payments or reschedule them so that the number
of nonaccrued accounts will not increase," he said.

Nonaccrued bills are those which have not been paid for more
than 180 days.

Malik said the credit card issuers had also become more
selective in issuing new cards.

One or two banks had stopped issuing new cards because of the
current unfavorable state of the economy, he added.

There are 23 local banks in the country which issue American
Express, Diners Club, Visa and MasterCard cards.

Habil said the number of transactions using credit cards in
the country had reached 33.80 million a year, or about 13 to 14
transactions a year for each card.

The value of transactions using credit cards rose dramatically
last year to Rp 20 trillion in 1997 from just over Rp 7 trillion
in the previous year.

The increase was due to the rupiah's dramatic depreciation
against the U.S. dollar since mid-last year, he said.

The country manager of Visa International, Ellyana Fuad, said
yesterday the value of transactions using Visa cards had risen 29
percent year on year to US$1.2 billion as of March this year.

However, the number of transactions dropped 2 percent in the
same period, Ellyana said without giving the figure.

There are now 1.34 million Visa cards in Indonesia since it
was launched in the country in 1983.

Visa launched yesterday a consumer guide booklet for using the
credit card which contains tips for cardholders on how to use
credit cards wisely. (das)