A local banker yesterday described the Govern-ment’s encouragement of Bahamian consumers to make payments with the use of their credit cards as “a bad idea.”
Speaking to members of the Rotary Club of Lucaya during their weekly meeting, Dwayne Swann, Home Finance Specialist at FirstCaribbean Bank, advised that unless one is diligent with spending and money, he would not even encourage the ownership of a credit card.
His comments stem from a revenue enhancement scheme introduced last November by the Ministry of Finance, aimed at making it more convenient for people to make payments to government agencies with credit cards.
The Government has already started a process with Commonwealth Bank and Royal Bank of Canada to enable the public to pay a variety of fees and charges using their credit cards.
Individuals, for example, can use Sun Card, MasterCard or Visa to pay for a business licence and other fees at the Public Treasury, to pay for Road Traffic licences and passports, as well as birth, death and marriage certificates.
It is believed that the main purpose for this new move is to remove, as much as possible, cash from daily transactions because it is felt that paper transactions are always safer.
Mr. Swann, however, said use of credit cards in this manner will not benefit the consumer in the long run because it will only land them in deeper debt.
He said if one wants to own a credit card, it is a good idea to have cash in the bank to be able to pay off the credit card bill. He advised that it is always best to pay in cash.
Mr. Swann noted that a credit card is ideal for persons who are travelling abroad because it is not wise to travel with excessive cash. In this instance, he said, it is wise to have sufficient cash in the bank to pay the balance off when you reach home.
“To actually pay bills using credit cards is not good because credit cards are open-end loans with very high interest rates, so when you don’t pay off that balance, you will be charged interest on the principal balance,” he said. “Unless you are really good with your money, I would not advise you to use them to pay your bills.”
Encouraging Rotarians to learn how to save, he said the reason why people cannot save is because they have too many bills.
“Some of them are living a lifestyle that their salaries cannot afford,” he said. “You should never live to try and impress the Jones’.”
He said it is best for those having trouble saving to talk to their bank about consolidation where they can convert all of their loans into one small monthly payment. The goal, he said, is to lower your monthly bills so that you can have something left over to save.
Mr. Swann said one should start off by saving at least five percent of your salary, adding that if 45 percent of your monthly salary goes towards bills, then it might be hard to qualify for a mortgage.
Mr. Swann noted that FirstCaribbean Bank will be holding its 5th annual Mortgage Fair and Home Expo this Saturday at the bank on the Mall Drive, adding that FirstCaribbean wants to put as many persons as possible in their own home. Home ownership, he said, is very important for Grand Bahama because it represents progress for the future.
“You don’t want to go through life paying rent, which is dead money,” he said. “I encourage all Grand Bahamians who can qualify to own a piece of the rock. This is the single most important thing, other than picking the right mate for an individual.”
Mr. Swann said interest rates on mortgage loans depend on one’s equity injection or the down payment of the loan in cash or property.
Ownership of land is very important as it can enable one to qualify for mortgages, he said, pointing out that there are cases where developers offer a house and land package deal for consumers and a down payment is required to qualify.
By LISA S. KING, Freeport News Reporter
