Sensible credit card use offers perks
The consumption behaviour of Bangladesh's growing middle income has made credit cards popular in recent years with several banks offering a variety of discounts and cashback facilities on purchases.
The plastic cards have already been synced with a sizable number of shops, enabling payments for different goods and services to be produced in the sort of equated monthly instalments (EMI).
An EMI is a fixed amount of money paid by a borrower to a lender at a specified date each thirty day period. This implies a credit cardholder can avail a fridge or television set whenever required in a much easier manner than through other modes of payment.
The plastic money also drew a whole lot of attention from clients when the government imposed strict restrictions on public movement between your last week of March and May to keep the coronavirus pandemic away.
Clients bought their required products, including food, while sitting in the home during the lockdown. The united states is now going right through another strict round of restrictive measures, which includes further increased the demand for the digital product.
The credit card business of banks increase manifold soon to maintain with the country's monetary growth, said HM Mostafizur Rahaman, head of retail banking of Dhaka Bank.
The number of bank cards stood at 17.14 lakh as of February this season, up 15.50 % year-on-year, showed data from Bangladesh Bank.
Loans through purchases made on credit increased 24 per cent year-on-year to Tk 1,509 crore.
Banks offer businesspeople and salaried employees of reliable organisations the enjoyment of credit card facilities, he said.
Even people with a minimum earnings of Tk 20,000 can enjoy a credit card from lenders.
Issuer banks fix the credit ceiling predicated on the monthly income of clients.
Clients normally enjoy a credit ceiling at least two or three times their monthly income.
Availing a debit card requires providing banks information regarding income sources alongside a tax identification number (TIN).
Dhaka Bank has recently inked deals with a lot more than 1,000 shops to supply discounts, cashbacks and the EMI facilities to its credit cardholders, said Rahaman.
Clients should follow the payment methods for the card bills to secure all the advantages of plastic money, said Mahiul Islam, head of retail banking at Brac Bank.
Credit cardholders usually get 45 days to settle payments against purchases.
This timeframe centres around loan statements. Each bank generates loan statements on a particular date of per month. Clients are allowed 15 days from the generation of loan statements to pay the bill against purchase of goods and services.
No interest is charged if clients pay the bill within this time around.
If clients cannot make the payment within this timeframe, a late repayment payment of Tk 500 to Tk 700 is imposed, and a 20 per cent interest is charged on what's overdue.
The interest on credit card is greater than that of other loan products proposed by lenders.
The operational and monitoring costs for the card are too high compared to other loan products of lenders, increasing the interest to a big extent.
The overdue fund slowly but surely becomes default ones according to the central bank common rules on loan classification.
The credit cardholders can also avail different benefits if indeed they use the product within an efficient manner.
For example, a platinum credit cardholder gets usage of lounges at airfields of different nations.
Such credit cards are usually wanted to high-value clients of banks.
The majority of local banks now use three global brands - Visa, Mastercard and American Express -- while issuing bank cards.
Clients may also enjoy cashbacks or discounts whilst travelling abroad, at the mercy of arrangements provided by their respective brands.
There may be implicit charges on credit card usage, said Hussain Ahmed Enamul Huda, an assistant professor of the finance department at the University of Dhaka.
"So, clients must calculate the EIR (effective interest) on bank cards," he said.
Chequebooks are issued against bank cards, so one can write down cheques against cards, he said, adding that no interest is charged up to a certain time period on cheque-based payments.
