Over the years, the credit card industry has been the subject of much controversy. Many critics have blamed credit card issuers’ loose restrictions for high fees and interest rates, which are often hidden in credit agreement so complex that card-owners have no chance sifting the wheat from the chaff. The deregulation of the industry that occurred in 1970s – 1980s is often blamed for this.
Mr. Fitz Jackson M.P. for South St. Catherine, challenged the banks to explain their charges; he said, a charge to the public, must be explained to the public, and I un-hesitantly support his position. You cannot charge applicable fees by using unknown and unsupported data.
Banks make a credit card charge account easier to obtain than a loan account, by asking much less security, so that persons can use the card to obtain cash and pay bills without too much difficulty.
They say your collateral is not enough to get a loan, and now they are able to overcharge on interest, adding late fees, plus late payment fees, and late payment additional Interest.
Rates for comparison in most developing countries are 4-8% on US Funded credit cards; In Jamaica it is as high as 20% for US cards. And in Jamaica it is effectively 48-50% for a Jamaican Dollar Card, probably a world maximum.
This practice does occur Overseas, but since. 2009, U.S. President Barack Obama signed a new bill into law to curb the most controversial credit card practices, including interest rate hikes, penalties and marketing to college students. Permission is required by the user to impose penalty charges, and to charge finance fees for previous cycles on the credit card. No interest is charged on due bills over holidays when paid on the next business day.
High fees and charges are the same situation being levelled at the Cambios. They want to take away business from the Cambios and so they increase fees to Cambios for cash deposits to (one) 1.00 JMD from J$ 0.25 cents, a total factor of one percent, on the foreign exchange value, and almost four hundred percent increase in charges.
In 1993 when Mr Jacques Bussieres was Governor of the Bank of Jamaica, the trend was raising rates, and inability to obtain foreign funds from the formal system of bankers. The Governor then authorised Cambios to operate, and foreign funds became available once again at competitive rates, indeed to increase the US funds reserve at the Central Bank. Bankers never thought the Cambios would be successful and capture almost 50% of the market by 2013, and they are trying to retrieve this position.
Their service record to their clients is terrible; less branches, longer waiting times, unable to assist for lack of competent staff, holding funds longer than necessary on cheques. In most Banks throughout Jamaica there are no public bathrooms, some not even drinking water, yet the client has to stand and wait. In my opinion banks are often improperly supervised and key employees often absent from work. Then why would one see five service counters, two or three always vacant in a crowded bank, and more vacancies when the bank is not busy?
Cambio managers, being relatively small business owners are at the point of sale in their Cambios or have family present, to analyse transactions, check sources, answer questions from clients if teller staff is not able; moreover to see their clients are served.
Finally as of to-day, there seem to be parties trying to create a foreign exchange shortage. A foreign exchange crisis is announced in to-day’s papers, by the president of the JMA, at a time when there is none; what is happening is confrontation between Banks and Cambios, with the former not wanting to take cash American Dollars. There are in fact a lot of cash dollars in the system as a consequence. And on the other hand the Banks require four weeks to clear any foreign draft from the system; when we cannot deposit cash, and have a hold on our cleared International Drafts, this obviously will create a shortage.
Getting back to Mr Fitz Jackson M.P., our local Barack Obama, according to my calculations, the Governor of the Bank of Jamaica is due to respond by the 15th of February, when an answer to Mr. Jackson, MP, is due. Perhaps he may answer before.
So we await answers from the Bankers Association; I hope there is an answer that makes sense.