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Indian Credit Cards

Tuesday, August 14, 2007

The usage of credit cards and their value in Eastern Europe, Africa and Latin America has been discussed for a long time already, stirring excitement among the socio-economic and moral aspects of the lives of peoples living there.

The convenience of going cash-free has reached these remote from the mainstream societies countries and is now melting into their minds, changing their particular mentality. And the mentality is as such - a personal debt is an unforgivable sin, a great shame and should never be tolerated in a society like ours.

Well, it all is easy said but not done. How can naïve and trusting people from the Third World resist such slogans as "Best rate credit card deals!", "Zero introductory and low ongoing APR for good credit histories!" and the like? Nowise, due to lack of credit education and this has become a most burning problem in financial matters of India.

The intolerably low level of credit education in India is aggravated by the unbelievably high interest rates - higher are only those in Brazil, coming to 200% - and this has already made some people think of the plastic money as evil right in its infancy.

Do not hasten to conclude, though. Despite being 30-50% high, interest rates are no obstacle for Indians to make credit card deals - they simply do not know of better credit card offers. It is evident, that suchlike people's ignorance cannot but benefit banks and credit card companies as it's the main source of making revenues so far.

Those cardholders who do know what rates and fees credit cards in developed countries offer, can only criticize and complain but can do nothing against the banks claiming to have followed all the appropriate and fair trade practices.

No wonder, however, that banks, such as HSBC or Citigroup as well as the national Indian banks HDFC and Icici, can dictate their own rules on credit card deals and there's strong reason for this - the short history of credit and lack of credit education as a result.

This, naturally, increases risk faced by credit companies, and they compensate for it through sky-high interest and hefty late payment charges. And the late payment charges are unavoidable under the circumstances.

In connection with it a question arises - are commercial banks subject to blame for the gross national credit card debt and, if yes, can their tough credit practices be eliminated? It is a plain fact - banks are cheating and misusing their power but it is also a fact that such organization as Monopolies and Restrictive Trade Practices Commission is empowered to surcharge companies and restrict their credit card deals practice.

It seems that the right time to take things under control has come. The mass media is already agitating card holders to cancel their credit cards to avoid a life-time debt which they call a sin. But those who didn't do it have collected so many unmanageable credit card bills that they simply stop paying them.

Thus, bankruptcy cases are increasing and the overall national credit card debt is not likely to be eliminated in the nearest future. World-wide known credit companies as well as local banks don't mind bankrupts, though, because well before their customers file, they will make substantial revenues on rates and charges.

So, creditors are still forcing their credit card deals on credit ignorant consumers who have income large enough to dispose of. How will it tell on the economy of the country and, what's more important, on the mentality of its people who have always considered debt a bad sin?

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