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March 16, 2007
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Friday
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Safar 26, 1428
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Credit card business slows down on high rates
By Shahid Iqbal
KARACHI, March 15: The growth of credit cards business slowed down in the last 12 months amid high charges and mishandling of the soaring complaints of customers, said a banker.
Bankers said the phenomenal growth in credit cards business lost its attraction while at the same time, it succeeded in capturing a sizable market.
“The expansion in credit card business has declined during the year,” said a banker dealing in credit cards business. The decline was not limited to any bank. Most of the banks were facing the same situation; however, some may have increased the business, he said.
Bankers reluctant to provide figures about the misuse or default of the cards, saying banks themselves became cautious after serious complaints from the general public.
There were serious allegations that the banks were charging late payment penalties despite payment on time. A number of card holders said that despite cancellation of credit cards banks charged interest, including late payment fee.
“The State Bank also took serious view of the situation and banks were advised to avoid any wrongdoings,” said the banker.
The SBP also instructed banks to make it clear that whether the credit being issued was insured or not. In a number of cases insurance fee were charged but in case of theft and misuse, the card holders were not compensated.
A case was filed by a card holder in Sindh High court against a foreign bank in late December 2006. The card holder argued that his card was stolen and was immediately misused resulting in huge losses but the bank refused to compensate him.
“After a series of incidents and various kinds of complaints we have developed a better system and kept it confined to particular sector and particular people,” said the banker.
A banking analyst said that the customers found that the interest rates, up to 36 per cent per annum, were too costly for the middle class who gradually abandon the use of cards and it was also one of the reasons for slow growth of credit cards business.
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