“Hi! How are you? Do you have a credit card?”
When you go to almost every mall in Jakarta, you’re bound to be welcomed by a credit card salesperson. One day these people may be representing “Bank X”, the next day, “Bank Y”. They will try to get your attention with lines like “You can apply now, it’ll only take 2 minutes”, “All we need is a copy of your ID”, “we offer the lowest interest compared to other banks”, “Applying is simple, please take a seat”.
Most banks that operate in Indonesia thesedays, offer such easiness in granting credit cards applications from its customers. The thing is… according to The Indonesian Credit Card Association (a.k.a Asosiasi Kartu Kredit Indonesia - AKKI), at the end of last year, there’s an amount of 6-12% of total credit card holders, that are problematic. Problematic means, credit card holders are not paying on their due date. Most of these “non-performing” customers hold1.5-2 credit cards.
Now why is this happening? root reason is –> these people don’t know what they’re getting themselves into.
1. Credit cards are just like any other credit schemes. Indonesian banks nowadays, give out credit cards with a monthly interest of 1.5 - 3.5 per cent. Multiply this by 12, and you’ll get an annual interest of 18 - 42%. Compare this to Housing Loans, or Consumption Loans that ranges between 17 - 19%. And we must also remember that, any delays in paying bills, will result in a fine, to which interest will also be applied to. That’s one of the reasons why banks are competing to get as much consumers as they can, because of the high interest income.
2. Level of income in Indonesia is LOW. Consumer buying power is low. Unless you are really wealthy, or you are a worldwide traveller, think again of owning a credit card. What is the main purpose of credit cards? Allows you to make transactions without having to use hard cash, which may not be safe. But come on, if you only use your credit cards to make payments of Rp.100,000 - 200,000, I think bringing 2-4 sheets of money is still manageable.
3. Credit cards are also useful when you want to spend an amount of money that you currently “don’t have”; but “will have” in the future. Now, call me conservative, but when I have a BIG purchase in my mind, I have some kind of a plan on when I will buy it, and how I will get the money. Even by using ATMs, nowadays you can withdraw up Rp. 5 million per day.
And what we all need to be aware of is… credit cards makes you “feel rich”, because you can use it anytime we want. But remember… there’s no such thing as “feeling broke”… when you’re broke… you’re broke :P
