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By Maricel E. Burgonio
MOST of the problems that
credit-card holders encounter have to do with their own failure to
manage their finances.
Those who are prudent don’t
have the problems faced by cardholders who overspend, pay only the
barest minimum and let their debts roll on and on.
This is the lesson we got from
Elvira E. Ditching-Lorico, head of the Consumer Affairs Unit of the
Bangko Sentral ng Pilipinas.
She said complaints received from
cardholders about excessive credit-card charges consist of the fees
and penalties on them. That’s because they spend more than they
have the ability to pay.
Those who pay only a part of
their balance must pay more in the end because of the interest they
have to pay, which is based on the total amount not only on the
balance unpaid.
Some cardholders end up getting
other cards from issuer banks and they use one card with which to
pay their debts on another card.
This only multiplies the interest
payment the consumer makes on meals, products and services. But, of
course, those who wish to live a rich man’s life can do this using
credit cards.
But it is not the wise way to
live, Lorico warns. “Spend within your means. Don’t overspend or
you will suffer,” she said.
Credit-card holders who do the
debt-rolling practice are called revolvers. They pay only minimum
balance or a greater portion of their balance but never pay in full.
Better to be a transactor. That
is the cardholder who pays in full on or before the due date.
The BSP is conducting Financial
Literacy program, including the proper use of credit cards and all
the information about charges. The program increases consumer
awareness of their risks and responsibilities as cardholders.
Another bad thing about the
credit-card system is fraud.
Obviously the perpetrators of
credit-card fraud are the credit-card companies and bank issuers.
The culprits are the cardholders
or syndicates of card-fraud bandits.
Fortunately, credit-card fraud in
the Philippines is lower than in this country’s fellow Asean
neighbors, Malaysia and Indonesia.
In August last year, an executive
of Visa International—which claims to have the biggest number of
cardholders in the country—said it has experienced tremendous
growth of its clientele.
James Dixon, then Visa
International country manager for the Philippines, said the firm
experienced growth in card sales—whether credit, debit or prepaid.
He said Visa achieved a
25.9-percent growth in card sales volume during the first half of
2006 over the same period in 2005.
National Statistics Office data
say that 84 percent of transactions in the Philippines involve cash.
Four percent of transactions are by credit cards, 5 percent by
checks.
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