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"Credit cards are a more “clever" financial tool" - Retail Banking Director of Piraeus Bank
08 January 2014

According to Ilias Mouzakis credit cards are a more "clever" financial tool, because the consumer has the ability to utilize his available funds when he/she needs. To his mind, this tool is way more flexible and allows the consumer to behave rationally and the banks to build a healthy long-term credit relationship with their clients: “Credit cards embrace such functionalities which are very preferential as opposed to other consumer lending products. The major advantage is that they promote a grace period of nonpayment. Grace period is one of the tools by which banks attract customers. It will be adjusted and become a selling factor, so the grace period will vary from 50 to 60 days,"- believes the banker.

Among the other crucial characteristics of credit cards Mr. Mouzakis mentioned the possibility to repay only the minimum payment even following the grace period, "This automatically creates the benefit to the borrower to smoothly schedule his repayment options without becoming difficult to service," - says Mr. Mouzakis. He also stresses that consumer lending products are currently the "hot" products in the market and the interest rate is among the main factors that client considers when choosing the bank: “Credit cards being no exception is one of the products that benefit from lower interest rates. However what really matters is the effective rate of the products, which usually is a lot higher than nominal interest rate which is promoted." Ilias Mouzakis explains how Piraeus Bank managed to establish a minimum market interest rate: "We succeeded to do so because we have identified the market segment which we are interested in by establishing a minimum level of official income – UAH 5 thousand. Moreover, our «true rate» approach which is based on "what you see is what you get" with no hidden fees and commissions."

Commenting interest rates outlook, Mr. Mouzakis said: "Due to the fact that consumer lending products are perceived to be high margin products, all these interest rate turbulences usually are being absorbed due to the wide spreads which exist. Therefore I’m expecting the rates in credit cards to be at the same level which currently are - about 40% per year", - commented the banker on his forecast.

Banker believes that the changes in credit cards will mostly effect on the comfort of service, as the banks will have to provide their customers with flexibility of minimizing their visits to branches and by limiting the bureaucracy. New programs will exist in the form of promotion in terms of pricing or even in the form of simplicity of the product", - said Ilias Mouzakis. At the same time he doesn’t expect that any major changes will be implemented as credit cards in Ukraine have not yet reached to a maturity level: “Changes will have a form of pricing/underwriting process rather than radical changes," - he concluded.

Mr. Mouzakis told how limits on credit cards at the bank are set: "There are no extra guarantees on any credit amount up to UAH 50 thousand. In all cases what we practically ask from the client is a salary certificate proving the level of his income or any other lending obligations he may have. For any limit which is more than UAH 50 thousand we consider it on case by case basis. Though this will be treated as nonstandard and more complicated process the decision-making process may take more time."

The bank has a convenient system of credit card debt repayment, including WinBank the electronic banking system: «First of all, there is a possibility of repayment through a branch. Secondly and foremost the client may repay through our fully online electronic banking platform WinBank. All our clients benefit from our free of charge registration to WinBank where they have the ability to execute a vast majority of transaction including repayment of their credit cards, check their available and used balance, make purchases, pay their utility bills, etc. In addition to this option and in case the clients does not have an access to Internet or Piraeus Bank branch, the client may visit any bank’s branch and make a transfer of his repayment amount directly to his credit card”, - said Retail Banking Director of Piraeus Bank.