By Dennise Williams, Staff reporterIN THEIR continuing drive to innovate the credit landscape in Jamaica, Courts (Ja) Ltd, the largest furniture retailer in Jamaica, has introduced the 'Ready Finance' credit card.
Speaking at the October 2003 launch of Ready Finance, Deputy Managing Director Dennis Harris stated, "From Courts arrived on the shores of Jamaica in 1959, we were the first to offer the now archaic term 'hire purchase'. Over the years we have grown improving on our credit terms every step of the way.
We have gone the route of insuring our customers against hazards, again raising the standards (at the time) on how credit is granted.
Courts re-looked at credit and in 1998 launched the EZEE Payment Plan. This plan guaranteed that the processing time for first account customers to be less than one hour. With the introduction of the Court Options Plan in 2000, it gave customers the option on how they want to pay." Speaking with the Financial Gleaner, Harris explained the genesis of the Ready Finance card and what Courts hopes to achieve with this in store credit card.
Firstly, Mr. Harris scoffs at the idea that the Ready Card is in response to furniture retailer Rooms to Go's credit card issued by National Commercial Bank. "This credit card had been conceptualised since early 2001. The worldwide Courts group has been working on the concept. It is not just here in Jamaica. In fact, it was launched in Barbados in May of this year." And the reason for the card was to get away from the traditional concept of 'hire purchase', which is seen, as archaic to a more modern approach to debt. Said Harris, "part of our market research has shown that people view store credit as unsophisticated.
Over the years, especially here in Jamaica, people saw credit as a roulette wheel. Once you are approved for one account, if you want another, you would not be sure that you would get it. Also, many customers would not open another account until they have paid off the existing one. So the idea came about to give the customer a credit limit."
Similar to a credit card, once you are approved, your spending limit is revolving. That is, as you pay off for purchases, you can buy again. The response so far has been so good. Said Harris, "so far we are very pleased with the response. We are experiencing a 70 - 80 per cent take up rate. This includes new customers and existing customers applying for the card."
Harris notes that it is not mandatory for customers to apply for the card, "customers are free to apply for credit in the older manner." In addition to the benefit of an approved spending limit, customers with several accounts all carrying different due dates will have them merged into one due date on the card. Explained Mr. Harris, "Customers with multiple accounts usually have different payment dates so customers have to come to Courts maybe three times for the month. Ready Finance means that one monthly payment is required and then allocated over the different accounts." And of course, Courts did not implement Ready Finance out of the goodness of their hearts. As outlined by Mr. Harris, Courts expects:
Customers will spend more money knowing what their pre-approved spending limit is.
Create greater efficiency in the credit approval process.
Cashiers will only have to manage one account.
Improved customer service as the credit approval is done in a shorter time.
Courts will continue to implement their Options credit programme with interest rates remaining unchanged. Although their 3 months option is an interest free credit option, the 10 months programme attracts a rate of 1.675 per cent per month, the Silver option attracts a rate of 1.4 per cent monthly and the Gold plan has a 1.59 per cent monthly rate. The credit approval process will also remain the same.
Using a computerised credit scoring system, Courts takes into consideration criteria such as income, expenses, gender, type of employment, etc. The rejection rate for applicants is under 10 per cent. Said Mr. Harris, "Our view is that if you do proper screening, then it makes the collection process simpler." Courts has 200,000 credit customers.
