Why the use of credit cards may not go well in Nigeria

Have I come across credit cards in Nigeria? Not at all. Nigeria basically operates a cash and carry payment mode and also uses debit cards. Debit cards are mostly circulated to customers for payments at different stores. This only implies that you can only purchase what you can afford.

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Many businesses in Nigeria would safely not run on credit sales, as they are prone to bankruptcy if they do. It is not unlikely that you will see a sign on a shop with the inscription "NO CREDIT TODAY, COME TOMORROW" or another with "CREDITS RUN DOWN BUSINESSES," and thus, sellers would not sell to buyers, either to friends or strangers. Sometimes, it's better to sell credit to strangers than to friends or family because legal proceedings can easily be taken against such defaulters.

The economy is not palatable, and it is not unlikely that people buy things on credit or get money via loans to pay for what they desire. Soft loans are preferred but can hardly be accessed, especially during this festive season when many people are struggling to make ends meet. This brings the option of credit apps such as Migo, Branch, Kashmoney, etc. These apps are readily accessible on our mobile phones, and their ads pop up every now and then. Many average and young people have had to use such apps to meet emergency needs. Most loan offers are minimal, usually less than N10,000 ($10) at the start, and when the customers meet up with early or timely payments, the loan limits are increased gradually. It is usually frustrating for people that use such apps for the first time, as most times, the loan required exceeds that which the loan apps offer at the start. The loan apps often ask for access to one's contacts and gallery, and occasionally, even the bank verification number (BVN). The interest on these loans is usually heartbreaking and could be as high as 20%, which is contrary to the advertisements commonly circulated. I have patronized Migo a couple of times, but only when I am certain the money I am expecting will come in before the deadline for repayment periods. Those loan apps can be embarrassing when the customers default. This can be as bad as defamation of the customer's character, which usually discourages prospective customers.

Loan repayment periods range from 2 weeks to one month to a maximum of 365 days. Using such avenues to access money, especially during this festive period, will be ill-advised. Most expenditures during this period are likely to be on desires or wants rather than needs, and thus, they may only accrue more debt.

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An escape credit source for me is my salary account, which is with Guaranty Trust Bank (GTB) and has a credit package for salary earners. This facility is available after one year of using the bank to receive your salary, and then your loan limit is increased gradually. I have had a maximum loan limit of N400,000 to be repaid not later than 12 months, and before now, the interest was at 1% but has been recently increased to 2%. Some of my friends lament exorbitant interests by other banks, but GTB seems affordable. And yes, there's the salary advance option, which can give you access to a third of your monthly salary.

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The unavailability of credit cards and limited access to credit sources such as loan apps in Nigeria is a blessing in disguise, I believe. The exorbitant interests on such credit sources would probably have great consequences when the repayment is to be effected. Here in Nigeria, people do not mind taking credit for every want or need; however, they lack reliable repayment mechanisms for such loans. I hope @terganftp is able to get a vivid overview of credit sources in Nigeria.

There is usually a propensity to spend during festive seasons, but in all sincerity, the majority of things we spend on can be overlooked. Here in Nigeria, January is usually considered a very long month, not necessarily because it does not have 31 days like some months, but because people would have received their salaries before Christmas, incurred debts, or expended their salaries before December ended, and, as expected, looked forward to alternative credit sources in the month of January. Those loan apps usually come in handy, especially as children resume school, among other expenses.

Thank you for reading. I would love to have your comments and contributions.

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