By Reg Rumney
Finance Minister Chris Liebenberg this week expressed concern about the effect of so-called “private label” credit cards on the country’s savings.
Liebenberg said that aside from inflation, the other factor decreasing savings was financial deregulation.
“When credit is more freely available, there is less saving.”
In that context he was concerned about the growth in private label credit cards.
Ironically, the bank which Liebenberg used to head, Nedcor, has just embarked on the creation of such cards for the SA Breweries group.
Such cards are distributed to customers through retailers, and judging by reports have been an enormous success.
Food and clothing retailer Woolworths launched its own credit card last year, and chainstore Pick ‘n Pay has said that more than 18 000 applications have been received for its “Charge Card” since its launch on January 22. The credit for and management of Pick ‘n Pay’s card, which gives customers credit at Pick ‘n Pay stores, is provided by Amalgamated Banks of SA.
Nedcor plans to offer an “Advantage Card” with Edgars, the OK and Amrel. Clothing store Edgars CEO George Beeton has been quoted as estimating a potential one-million cards from the sound existing Edgars and Sales House store accounts alone.
An Absa spokesman would not say how much credit had so far been created by the issue of the Pick ‘n Pay cards, but said the credit limits ranged between R500 and R5 000. While it could be argued that such cards gave credit to those who would not normally be given credit facilities, he said the in-house environment and the use of a PIN number made it easier for the bank to pick up abuse of the cards and manage bad debts.
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