Банкеръ Weekly



Every second Bulgarian has a debit or a credit card according to statistics of the Borika national card operator. In end-June the total number of cards issued by banks reached 3,610,000, while six months earlier they were 100,000 less. It's not surprising that debit cards are more. Their number is 2,820,000, and credit cards are 400,000. This is easily explained, considering the fact that banks have been offering debit cards since 1996, while real credit cards entered the market on a large scale only two years ago. Earlier, credit institutions used to issue the so-called charge cards, obliging the client to have a deposit in the respective bank in order to use the card. Of course, this was absolutely nonsensical and the charge cards disappeared once the real credit cards came in use. According to some western analysts, credit cards will mark a rapid development in East European countries. Not only because people's incomes in them are gradually increasing, but because the credit card is the most convenient means for booking tickets and hotel rooms, buying household goods, paying for petrol and diesel oil, etc. It is convenient because even in Bulgaria almost all travel agencies, hotels, petrol stations, and big stores accept payment by credit cards. Within the last six months a considerably large groupof potential credit cards clientswas formed in Bulgaria - gamers, who spend much of their free time playing computers. In their circles it is said that some 100,000 Bulgarians currently play in the servers of World of the Warcraft - a real-time game, which is more popular by its abbreviation WOW. The problem is that in order to play you have to pay each month and that could be done in two ways - by a credit card or a special card, which is sold in the shops for computer games. But paying by such a card is EUR2-3 more expensive than by a credit card. The terms for issuing credit cardsare almost the same for all banks. The credit institution demands from the client to present documents, proving he or she has sufficient incomes to cover the payments, effected by the credit card. Depending on the size of incomes, the bank sets the credit limit - i.e. the amount which the card holder could borrow. When assessing the client's solvency, bank officers check the credit register to establish if he/she has other liabilities.Post Bank, for instance issues three kinds of credit cards - EuroLine, Visa, and American Express. The applicants for a EuroLine card with a credit limit up to BGN2,000, are required to present at the bank a personal identity card and a document proving they have been employed under a permanent labour contract for at least nine months. A monthly 1.5% interest is charged for paying goods and services by the EuroLine card.If the client uses a Visa card and draws money from an ATM, managed by Post Bank, he pays BGN0.20 for each operation, or BGN0.60 if the ATM belongs to another credit institution. The client does not pay a fee if he buys goods and services at a trader who has installed a POS terminal of Post Bank, and holders of credit cards issued by other banks are charged BGN0.20 for a transfer.Holders of American Express cards have a credit limit of BGN1,000-5,000. A golden American Express card is issued for amounts higher than BGN5,000. The client does not pay interest if he settles his liabilities within 55 days after drawing the credit. Otherwise, he pays 17.9% interest (16.9% in the case of a golden card) on the due amount. In addition, the client pays an annual fee of BGN50 (BGN120 for a golden card).First Investment Bank (FIB) issues Visa and MasterCard credit cards. The credit limits of their holders are specified by the bank on the grounds of the clients' incomes and may reach BGN50,000. The bank does not charge fees for the first year of using its cards, and the annual fee for the following years is BGN20. A holder of a card issued by FIB does not pay interest on the used credit if it is repaid within 45 days. Otherwise, a monthly 1.5% interest is payable. After the 45-day terms expires, the minimum repayment instalment is 5% of the used credit and the bank charges a BGN50 penalty if the payment is not effected in due time. It is not advisableto draw money in cash by the credit cards, because the fees for such operations are usually quite stiff. If a holder of a FIB credit card draws money from its ATMs, he/she is charged BGN1 plus 1% of the amount. And if the money is drawn form another bank's ATM, the fee is BGN3 plus 1% of the amount. The fee is still higher if the client draws money from an ATM in another country - BGN10 plus 1% of the used credit. The respective fee charged by United Bulgarian Bank (UBB) is about EUR3 or USD3 plus 1.5% of the used amount. BULBANK charges 1% if the money is drawn from its own ATM, and EUR2.5 plus 1% of the transaction's price if the ATM belongs to another bank. The card holder does not pay a fee if the payment is effected via a POS terminal of the bank which has issued the credit card. When the operation is effected via another bank's terminal or abroad, the fee does not exceed 0.5% of the paid money. This is so because credit cards are meant to service non-cash settlements and not to encourage payments in cash. Such a logic is principally understandable for countries where there are POS terminals in all stores. In Bulgaria, however, POS terminals are available only in very big shops, in some of the petrol stations, and in some of the elite hotel complexes. Elsewhere payments are effected in cash. The reason is easily explained for East European countries - there are not many traders (especially retailers) who are willing to bring their entire turnover to the light. And this becomes inevitable if a POS terminal is installed in the establishment. Of course, like any other bank product, credit cards may cause various problemsto their owners. They should get accustomed to keep the bills they get when effecting payments by their cards and check if they correspond to the report about all operations which they get from the bank each month. There are a number of cases when some transactions are effected twice through the fault of the servicing bank or of the company which has received the payment by the credit card. Moreover, the virtual space is not adequately protected and many hackers penetrate the protection of systems for settlements by credit cards and drain money from the accounts. The biggest problem when using credit cards is that it very quickly leads to considerable indebtedness. Therefore, economists from the developed industrial countries qualify the credit indebtedness of the population as the modern slavery. Because when someone has debts his only thought is how to keep his job and work still better in order to increase his incomes and repay his liabilities.

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