KARACHI, Feb 23: Credit card users have been losing millions of rupees on daily basis in the name of late payment, outstanding charges, transaction charges even before activation of cards, misuse of cards and a number of reasons which the customers are not properly informed about.
Despite very high interest rates which vary bank to bank from 32 to 36 per cent per annum, the credit cards created mess for thousands resulting in penalties to customers.
Complaints are not restricted to few banks but most of the banks issuing credit cards were found to be fleecing customers. Sales representatives of these banks promoting credit cards were also involved in misguiding the customers.
They used to offer cards free of charges and no membership fee but the bills issued by banks carried all sorts of charges. The deceptive activities of the sales representatives of several banks have been continuing for years but no bank has taken any notice so far.
It was also discovered that talking to customer services’ head of any bank was almost impossible. Customers cannot discuss their problems with any banker having authority to resolve their problems.
“I got a credit card from the United Bank but did not get it activated. However, the bank at first charged transaction fee of Rs1,000 which accumulated to Rs2,600 within three months,” said Mr Aamir. He wanted to know the transactions against which he was charged but no proper answer was provided by the bank. The charging of transaction fee without activation of credit card is common in other banks also.
Hundreds of young girls and boys are involved in promotion of credit cards but they paint deceptive picture to customers. They insist that services are free which does not seem to be the case.
“I was almost forced into getting a free Warid connection through Bank Alfalah credit card. I already had another credit card and a mobile connection of other telephone company but the gentleman requested to get it free so that he could improve his job performance,” said Mr Jalal while narrating his story. He said the sim of Warid company was not free as the bank charged Rs200.
“I was advised to cut the sim and drop it into the drop box of the bank if I do not need it, which I did but the next month the bill was Rs400 which reached to Rs1,200 in four months,” he said. His two other colleagues were also cheated in the same manner and now all of them were advised to pay and resolve the problem.
It was observed that the helpline set up by various banks proved another cause of concern for the customers as instead of guiding them, they are misleading. The ill-equipped helpline people never provide solution or the solution they proposed never resolve the problems.
“The final solution is to pay and get out of the mess,” said Mr Wahid who settled his accounts in a foreign bank five years back before leaving Pakistan but found outstanding charges waiting to be paid.
“On return from abroad after five years I applied for credit cards in various banks but all of them refused. It was extremely difficult to find the reason but finally I was told that Rs1,760 is outstanding in my account,” he said. He got a clean chit after payment from the bank in three months but still waiting to get a credit card. He was not explained as to why was he compelled to pay Rs1,760.
It was a common complain that banks were charging for late payment despite timely payments. “I was charged twice for late payment despite my prompt payment habit,” said Arif, a government official.
Credit cards were introduced to expand credit business which picked up sharply during the past two years despite very high interest rates. Banks are charging interest at a rate of 32 to 36 per cent per annum.
“When the interest rate was at lowest level of 1.5 to 2 per cent, banks were charging at the rate above 30 per cent per annum and this should be checked by the State Bank which is supposed to protect the interest of clients,” said an analyst.
He said the mess emerged from the day when banks announced free distribution of credit cards which attracted thousands of people to get the cards without need. It has also increased the default possibility.
“Bank charges on credit cards are so high that even if the default rate becomes 50 per cent, banks would get good profits,” said the analyst.
Banks earn from the trust of the people on them but the increasing complains against them will seriously damage the reputation it gained during the last five years due to hard efforts of Prime Minister Shaukat Aziz and former SBP governor Dr Ishrat Husain.
