(MENAFN - Arab News) A growing number of bank customers in the Kingdom have second thoughts about using credit cards such as Visa, Master Card and American Express. It is mostly people of limited income group who find it hard to repay the debt and fall into a debt trap.
Arab expatriate Muhammad Ali Yamani said the delay in repaying the credit had doubled or tripled his debt to his banks and has become a burden that he cannot afford to repay given his limited monthly income. This is a situation faced by many ordinary people.
Abdul Aziz Asiri, a Saudi, said he was thinking of limiting the use of the credit cards he received from different banks because they tempted him to buy things more than he actually needed by 50 percent.
"On many occasions the credit cards in my pocket tempt me to buy things which I would not have bought if the cards were not with me," Asiri told Arab News.
Saudi nurse Abeer Turkistani said even though 80 percent of her purchases are on credit cards, she never goes on a shopping spree.
Another Saudi, Khaled Al-Amoudi, said he was reluctant to use credit cards these days because some traders demanded extra charge for credit card payments in addition to monthly fees charged by the companies that issued the cards.
On the other hand, Secretary General of the Media and Awareness Committee of Saudi banking sector Talat Hafiz said only 1.5 percent of the total credit payments were in default. This is much lower than in other Arab countries or other parts of the world, a fact he attribtuted to the healthy credit policies of Saudi banks.
He said while credit cards have been in use in the Kingdom for the past two decades, credit purchases peaked at SR9.4 billion in 2008.
He added that while a fee of about SR70 is charged for issue of a credit card, the ATM cards are issued with no fees at all.
In the Saudi market, 12 local and 11 foreign banks are competing to get the largest market share for credit cards, he said.
He said the practice of any trader charging a fee for payment through credit card is illegal. Some traders' claim that they experience delay in getting the payment for credit card sales is not true as payments are made without any delay online.
A trader charging extra for credit card use is liable for penal action.