The usage of credit card while travelling abroad has been banned for Nigerians as a measure by the Federal Government to try to check the flow of foreign exchange out of the country.
The ban will be effected from January 1, 2016 and the access foreign online retailers would also be affected by the measure. One email from a bank to its customers have however mentioned that the ban is just a ‘temporary’ measure
The largest economy of Africa, Nigeria has spent billions of dollars propping up the currency since it fixed the exchange rate in February and tightened rules to curb speculations. The unofficial value of the Nigerian currency, the Naira has plunged over many months due to a sharp fall in the global oil prices which is the main commodity of export for Nigeria.
As of now it is not clear exactly how many people will be affected by this measure but according to BBC reporter Bashir Sa’ad Abdullahi in the capital, Abuja wealthy Nigerians travelling abroad on a regular basis are used to use their local cards for shopping and all other kinds of transactions. Some top end shops in London even have signs in Hausa in order to cater to the large number of Nigerian customers.
Standard Chartered, a well-known Global Bank had notified its users about the ban. Back in June the Central Bank banned the businesses from accessing hard currency to import about 40 items. The list included Indian incense, plastic and rubber products, soaps and even private jets. The amount that the Nigerians could spend on credit cards abroad had already been reduced by almost all the major banks.
While use of credit cards have a plethora of advantages like convenience, record keeping, low cost loans, Instant cash, perks, building positive credit, purchase protection, balance surfing etc. it also has a number of disadvantages like overuse, paperwork, high cost fees, unexpected fees, no free lunch, deepening the debt, homework and teaser rates. Bring the economy would however need more measure other than banning the use of credit cards abroad.