Banks continue to charge their customers fees for availing themselves of certain banking services despite the fact that numerous lawsuits against banks' imposition of these fees have been won by consumers. Consumers and their relationships with banks have always been a hot topic in Turkey, especially when it comes to the widespread credit card use in the country. Credit card usage always elicits long discussions over whether it is legal for banks to charge credit card use and account maintenance fees. Many consumers claim that banks demanding credit card and account maintenance fees is unfair. Banks, on the other hand, insist that their practices are in line with the law.
Speaking to Sunday's Zaman, Consumers' Union President Nazım Kaya underlined that it is not legal for banks to charge a credit card usage fee and account maintenance fee if that stipulation in the agreement -- made upon opening a new account or applying for a credit card -- is inserted without the consumer's knowledge. "Banks can only charge their clients a fee [for credit card and account maintenance] if they have their clients sign a particular clause stating that there is a fee attached to using the credit card and or a deposit bank account in the agreement," Kaya noted.
But he admitted that even if consumers sue banks and win back the fees they paid in the first place, banks simply demand another fee the following year, claiming it is a new fee for that year. "In any case, the state does not defend consumers properly," he added.
Federation of Consumers' Associations (TÜDEF) President Sıtkı Yılmaz has also expressed similar sentiments on the issue. In remarks to Sunday's Zaman, he noted that excessive bank fees are "unfair and discretionary," adding that consumers are forced to sign a uniform agreement when opening an account or applying for a credit card. He reiterated that the fees banks charge for various banking services have been proven to be in contravention of the law in numerous lawsuits consumers have won. "I advise consumers to write a petition stating that they demand the fees back and refer to previous lawsuits. They can get their money back," Yılmaz noted.
It should be made clear that in some cases banks do not charge their customers account maintenance fees. For instance, if a certain employee's wages – including pensions -- are being deposited monthly in their bank account, or if the account owner has at least one automatic bill payment, such as electricity or natural gas bills, registered on the account, the bank does not charge any annual account maintenance fees. Banks often market such a practice as an advantage to opening an account with them. The public should also bear in mind that banks, especially in the case of monthly salary payments deposited into an account, can use all that capital for overnight interest rates, earning a huge income from interest alone. And if an account owner does not use his salary for a certain period, the bank will continue to use the excess at their disposal to invest, thus creating value with someone else's money.
Credit card limit: a time bomb?
Speaking to Sunday's Zaman on condition of anonymity, the owner of a mid-size enterprise in İstanbul spoke about his experience with a bank manager who revealed that banks do in fact favor indebted customers over those who pay their debts on time. "A branch manager from Yapı Kredi Bank told me that the best customer is the one who has more debt," he said. "I went to the bank to apply for an increase in my credit card limit, which was not enough for me at the time. When looking at my financial record, the banker saw that I have never exceeded the due date of my credit card payment. He also saw that I had never taken out a loan. From a consumer's perspective, I should have been a very good customer. But the branch manager said they could not earn any money from me since I pay everything on time. Therefore, they rejected my application to increase my credit card limit even though I know that one of my employees has a much higher limit than me despite the fact that I am the one who pays his monthly salary."
As in the case above, there are numerous people in Turkey who have higher credit card limits than they can manage, while on the other hand there are others who request a higher limit due to an increase in income. One reason banks do not want to increase the credit card limits of "good" customers is that these customers owe banks "free" money. What is meant by "free" money is that when customers finance their needs with a credit card and pay it back one month later they can avoid interest if they pay on time. In this case it is true that a good customer is not a preferred customer since they essentially use someone else's money for free. But many question how ethical it is to continuously grant credit cards and higher credit limits to customers with a bad credit history. Many banks know that "bad" customers will at a certain point incur interest by not paying the total amount due.
"Unfortunately this is true. There are many consumers who have thousands of lira in credit card limits, but only earn the minimum wage, which is below TL 700 a month," Kaya explains. "Knowing there are approximately 45 million credit card users in Turkey and that almost 25 percent of banks' revenues come from credit card interest payments by consumers, they want to give more limits to consumers who are not able to pay their credit card bill."
Yılmaz draws attention to another interesting point here, too. He said the minimum payment for credit card bills -- the amount a consumer should pay in order to avoid legal or financial repercussions -- should be done away with completely. Currently the minimum rate is 20 percent in Turkey. Consumers who are not able to pay off their credit card bill completely are given the option of paying 20 percent of the bill and can postpone the rest of their bill for the next month. But what is crucial here is that interest rates on such credit card bills are huge -- around 30 percent annually. The government has taken several initiatives to increase minimum payment rates to 40 percent, but banks have resisted doing so.
Banks' opposition to increasing minimum payments is quite logical considering that there are 10 million indebted credit card users in the country who pay a monthly interest of 2.5 percent. "We [TÜDEF] suggest that this minimum payment rate should be abolished completely since consumers only sink more by postponing their debt. The amount of debt keeps snowballing and reaches a huge amount due to high interest rates," Yılmaz asserts.
The debate between banks and consumers, in this case consumers' unions, is likely to continue to be a hot topic in Turkey. Consumers should bear in mind that banks, like all other companies, are corporations whose goal is to maximize their profits. Making money by giving out loans and charging interest on them and investing the excess amount of liquidity in several assets is part of these businesses' way of operating. On the other hand, banks should try to be more aware of the ethics involved by putting an end to granting higher credit limits to low-income consumers as they are well aware that such customers do not have the means to pay back their debt.
CHALast Mod: 05 Şubat 2011, 16:10