HN: Czechs hand in credit cards in fear of debt
28 February 2013
It seems that Czechs are reasonable enough not to go shopping with credit cards anymore, the paper says.
The Ceska sporitelna (CS) bank currently has roughly 350,000 credit cards, compared to more than 550,000 in 2008. Last year the number of CS's credit cards fell by 42,000.
Komercni banka (KB) registered 209,000 credit cards at the end of 2012, or 3 percent less than one year before.
At the end of 2012, 2.3 million credit cards and 7.6 million debit cards were registered in the 10.5-million country.
Other Czech banks also confirm that clients are not interested in credit cards and their attitude to this product is unlikely to change in near future.
"We can see that clients are more careful with debts. The situation won't change this year," CSOB bank spokeswoman Pavla Havova told HN.
"At a time of unstable economy, the client's willingness to spend money on consumption seems to decrease. On the contrary, people tend to save money," KB spokeswoman Monika Klucova said.
Banks consider a credit card a loan even if a person does not use the card at all and they take the card into account when assessing people's applications for new loans.
Moreover, many people started to use credit cards more often than they planned.
"I gradually fell into the credit trap, too," a 35-year-old manager said.
"Now I have a single credit card, in case of an emergency. I know that most of my acquaintances did the same," she added.
Czech Bank Card Association chief executive Roman Kotlan said the current trend is to pay back the debts on credit cards, usually by taking a single loan.
A lot of people found out that it is hard to pay the debt they had on a credit card, the paper writes.
"In the boom before the crisis many people drew all the money from their new credit card at once. But their next monthly salary was not enough to pay the debt and it took them a long time to get rid of it and they had to pay high interests," said Ondrej Hak, from Equa bank.
Hak said eight of ten clients address Equa bank with the wish to take out a single loan that would cover their debts on three or four credit cards, for which they had to pay higher interests.
HN writes that the Czech credit card boom ended and people's interest in them has dropped even though some banks offer them in retail chains and even though a new bank, Zuno, entered the credit card market last year.
According to the Czech central bank, the debt on all Czechs credit cards is about 25 billion crowns.
Despite people's aversion to credit cards, some companies expanded their business last year. The sum total loaned by Home Credit, owned by the PPF group, via credit cards in 2012 was 23 percent higher than in 2011, HN writes.
It says companies do not plan to give up this business in the Czech Republic because the profits are high. Clients who pay the debt belatedly have to cover an average interest of 24 percent, which is nearly 10 percentage points more than the average interest of a consumer loan, the paper notes.
($1=19.554 crowns)
Copyright 2011 by the Czech News Agency (ČTK). All rights reserved.
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