Credit charred

Obviously, every Filipino migrant worker must know one thing about credit card debts: the interest rate is a killer.

According to news report from Abu Dhabi that came out Tuesday, hordes of OFWs are going to jail, burned by mounting unpaid credit card debts, the interest charges going at more than 50 percent a year. In short, murderous!

Perhaps those poor OFWs did not know any better than to use short-term high-interest credit cards debts to finance business ventures here at home, for instance.

But I say that they did not have much choice.

Despite all the exaltation, we call them modern-day heroes who prop up the Philippine economy with billions of foreign exchange remittances, this country does not have any working program on special lending to the OFWs.

All right, at one time, the OWWA—or the Overseas Workers Welfare Administration—had a lending program for “displaced” OFWs, giving out loans of P50,000 per family. It was just a token program, good PR, period.

Like it or not, a more professional lending program should be undertaken by the banks. Lending is their main business, for God’s sake!

Our private banks simply enjoy making a killing out of OFW remittances. And to hell with their future financial well-being!

Obviously, we also have to do something about their credit problem other than just conducting so-called financial literacy seminars. Who attends such boring sessions full of official speeches, anyway?

It is not just a problem of information. We also have to give them more choices other than borrowing through credit cards.

* * *

“What Credit Cardholders Should Know about Interests and Penalties on Credit Card Transactions” may be a long title for a book, but its message is most relevant to a lot of the guys down here in my barangay.

The author of the book is Nelly Villafuerte, the former trade undersecretary who is now a member of the seven-seat policymaking body of the Bangko Sentral, the Monetary Board.

How I wish those Filipino migrant workers in the Middle East read the Villafuerte book before they go on a credit card borrowing binge.

Anyway, if there is one message in the book that I should relay to all credit card bearing individuals in this country, it is the ruling of the Supreme Court on a case involving unpaid credit card debts of a couple.

The Supreme Court ruled that the interest rates charged by most credit card companies, which is more than 3 percent a month, were “iniquitous, unconscionable and exorbitant.”

* * *

Word goes around that celebrity Danny Javier, an original member of the hit recording group Apo Hiking Society, also had a problem with his credit card, apparently issued by Citibank.

It seems that, upon receiving his billing statement, Javier called the company to inquire about the P5,000 charge in the bill, labeled as “membership fee.”

For the information of those lawmakers, who at the moment are crafting some bills to regulate the credit card industry, thereby creating order in the business, credit card companies today simply hire call centers to do the dirty work of customer relations for them.

Really, what kind of business transaction can you expect from the poor overworked guys at the call centers?

Anyway, Javier supposedly pointed out that his credit card transactions could easily amount to between P300,000 and P400,000 a year. He thus inquired if he could ask for an exemption from the membership fee.

They said he could be exempted only if he coursed the payments of all his utility bills through the credit card company exclusively.

Javier decided to cancel the card. Yes!

* * *

This consumer has another problem, something to do with an expensive luxury car—a BMW.

It seems that Ernesto Lim, the son of the late chair emeritus of the Philippine Stock Exchange Eddie Lim, bought a BMW car worth more than P2.5 million about two years ago.

The car actually was assigned to the corporate secretary of Lim’s construction company called Eaglecor. After one a half years, with an odometer reading of less than 6,000 kilometers, the BMW stalled right smack in the middle of Ortigas Avenue.

Look at that—running less than 6,000 kilometers and the BMW breaks down!

Anyway, the dealer (Autohaus BMW in Libis, Quezon City) diagnosed the problem as defective transmission. Thus the dealer replaced the transmission—with just a one-year warranty period.

Now, Lim has been a loyal customer of BMW over the years. The guy already bought five BMW cars. I know for a fact that even his golf cart bears the BMW emblems on all four wheels and the front side. This guy is a fanatic BMW fan.

Of course he rejected the one-year warranty offered by the dealer. Instead he proposed four options: replacement of the car, total refund, trade-in or five-year warranty for the transmission.

BMW dealer rejected all four. It only extended the warranty to two years. Wow!

From what I gathered, the car dealer does not call the shots in cases like Lim’s. It comes from BMW Philippines. It is hard to say if the decision regarding Lim’s case actually comes all the way from the head office in Germany.

Something is at stake here for the car company, I think. We are not talking here about ordinary cars. This is BMW.

A couple of years ago I was driving a BMW car that was more than 30 years old. It was still much better than any brand-new car I had.

Lim’s car broke down after one and a half years. Is it possible at all? For a BMW? No wonder, rumors are flying all over town about the “transmission” used by BMW for certain models. Something about its being disposable!

Anyway, when are our lawmakers going to craft a “lemon law” in this country?