There seems to be a consensus that certain practices of some credit card collection agencies go beyond what is fair and reasonable, something which is officially recognized when no less than the Bangko Sentral ng Pilipinas issued the rules prohibiting certain unfair collection practices. For a change of perspective, put yourself into the shoes of credit card companies and ask yourself what would you do under the following circumstances:
1. You are in the credit card business and the business basically involves giving a fixed credit line to persons. As long as the cardholder stays within the credit limit, he could borrow the money from you. Convenient loan on demand.
2. Banks and other financial institutions require collateral for loans. This is a security in case a borrower doesn’t pay up on time. The process is long and the requirements abound. Interest rate and charges are generally higher for loans without collaterals because the risk significantly increases.
3. As a credit card company, you don’t charge interests or penalties as long as your cardholder pays the entire borrowed amount when it falls due. Your card holders know, or should know, this. Yet, so many decide to pay ONLY the minimum monthly amount.
4. Conversely, you charge interest when the borrower pays only the minimum monthly amount. You also charge penalties and surcharges in case of arrears. You hire collectors to collect the arrears. You know that your collectors are just doing their job. You also know that since they’re on the front line, much abuse and disdain, undeserved or otherwise, would be heaped on them.
5. Your cardholders also know that they must spend within their means, that they must use the credit card wisely, that they must pay what they owe.
6. You face not only cardholders who run from their debts, but also credit card frauds. You deal not only with one or a hundred card holders, talking to them whenever they fail to pay. You’re facing hundreds of thousands of cardholders.
7. You when someone borrows money, they know when it is due. In other words, there is some sort of promise to pay on a certain date. You also know that when it’s time to call on the promise to pay, sometimes cardholders can’t keep that promise for one reason or another. You also know that going through each reason would be a logistical impossibility.
Now, if a big chunk of these cardholders fail or refuse to pay, what would you do? How would you collect their debts?