An unconfirmed estimate puts the population of credit card holders in Nigeria at 0.5%. Even the number, according to some analysts told BusinessDay may actually be very generous. The level of credit awareness in the country is abysmally low.
There are many reasons why credit cards have not latched on majority of Nigerians. Aside from low awareness, the other reason is the very stringent conditions attached to credit cards by traditional banking institutions. Qualification for credit cards usually requires that applicants are in the higher percentile in average yearly earnings.
Despite the situation of the Nigerian economy, there are some forward-looking banks that are eagerly issuing credit cards to their customers. The major driver for these banks comes from the compelling need to compete and stay relevant in the age of start-ups in financial technology (Fintech) that are filling the personal loan gaps and issuing credit cards at will.
The rest banks are immobilized by the fear of huge potential losses arising from defaults and or the data getting into the hands of cyber criminals. Even without the use of credit cards in Nigeria, the debt portfolios of their clients keep rising because recovery officers either do nothing or management issue loans without considering the risk appetite.
A few weeks ago, a friend got a call from a customer care official of one of the top banks in Nigeria. The agent at the other end informed him he qualified for a credit card of N50, 000. While that may not have seemed significant to some people, but the friend was tempted by the offer. He happened to be in a bad place with his finance at that particular time.
The banks issuing credit cards have a set of new rules it appears. First you do not need to earn a very big salary annually. This time, so long as your income is steady and significant – like a six figure salary monthly, you are qualified. However, the more you earn the larger credit facility you are qualified to receive.
Second it also helps if you are an account owner and have run the account for at least six months. The period will help the bank access your earnings and spending patterns. If it is irregular, the more unlikely you will be considered for a credit card.
There is also the matter of your age. The banks do not give credit cards to an under-age, only adults. So if you are below the age of 21 you are not qualified.
Once you are deemed eligible for a credit card, you may get a call – like my friend did, from a bank agent or just apply for one. But it is important that you are ready before you get one.
The first thing my friend did before considering the loan was to do a research. Do not expect the bank agents to tell you the downside of taking a credit card. The information he or she will give you is mainly the benefits of a credit card – everything to make you apply. If you want to know more about the credit card offer, do your research. Before you commit find out what the interest rate is, how much the bank collects as service charge, transaction charges, default penalties are and other hidden charges.
Second, financial maturity is a vital ingredient to consider when applying for. That the bank said you are qualified does not mean you are ready for a credit card. You need to be responsible enough to charge only what you can afford and to pay your bill every month without being prompted.
One of the better reasons for collecting a credit card is to help build your credit. If you are able to maintain a good credit, it will serve you well in obtaining future loans for your business at favourable rates.
