Jun 2016 Financial News

Jamaicans show less love for their credit cards

Jun 17, 2016

Local banks which are competing within the credit card market are doing so against the background of reduced use of this kind of credit during the last year.

While credit card balances grew year over year, the Bank of Jamaica (BOJ) notes in its annual report for the 2015 review period that transactions declined in volume.

Commercial banks reported a reduction of 13.5 per cent in volume and an increase of 10.6 per cent in value, respectively, for credit card transactions in 2015 relative to 2014.

This reflected total transactions of 14.7 million valued at $212.6 billion, the BOJ indicates.

Lenders are undeterred by the trend, each doing their best to encourage use. Scotiabank, which reports increasing personal and credit card loans of 9.8 per cent last year inked a deal with ADS Global earlier in 2016 for telemarketing sales of some credit cards, effective March 29. It has also been making use of ads on social media to promote its cards.

New entrant to the market, Jamaica National Building Society (JNBS), has just introduced its JN Visa Classic and JN Visa Gold credit cards. JNBS rates start at 35 per cent per annum on the reducing balance, undercutting average rates offered by other banks of above 43 per cent.

CIBC FirstCaribbean made its move earlier in 2015, by rolling out a campaign which promised zero interest rate until 2016 to those who switch other bank cards for one which is CIBC-branded.

While a number of banks hiked rates for their cards this year, they also said they were putting in place incentives for good behaviour.

National Commercial Bank indicated in April this year that it was introducing a tiered interest-rate structure with credit card rates being determined by the user’s credit score.

The bank said that cards which once attracted an interest rate of 49 per cent across the board would offer to clients with good history a cut to a rate of 46.99 per cent; while others may see a 2.9 per cent increase in their interest rate charge to 51.9 per cent.

The bank also introduced new interest rates ranging from the current rate of 18 per cent up to 21.9 per cent for its US dollar MasterCard and TravelMaster.

Source:
BY AVIA COLLINDER
collindera@jamaicaobserver.com
Business reporter
Jamaica Observer
Friday June 17, 2016

http://www.jamaicaobserver.com/news/Jamaicans-show-less-love-for-their-credit-cards_64058