30 March 2023, Basseterre, Saint Christopher (St Kitts) and Nevis –Savings accounts, loans and credit cardsare some of the key facilities offered by commercial banks to the citizens and residents of the Eastern Caribbean Currency Union (ECCU).
In the second of a two-part ECCB Connects programme, Baldwin Taylor, General Manager of Bank of Montserrat Limited, discusses key banking terms relating to loans and credit cards that persons should be familiar with. Taylor also serves as the Secretary of the Bankers Associations forAntigua and Barbuda and Montserrat, and the ECCU.
Taylor defines collateral as the security that a bank will hold against a loan facility to allow the bank to recover the fundsloaned in the event of a default. He explained that thiscollateral can be in the form of cash, a bill of sale or a mortgage over a property. He deemed collateral to be very important as it is depositors’ funds that banks loan to customers.
On the matter of interest rates, Taylor notes that the ratesare a function of the risk involved in lending to a customer, stating that when the risk is high, interest rates will be higher and vice versa. He further explains that there were a number of factors to consider when negotiating an interest rate. These may include the long-standing history and relationship with a customer, the size of the mortgage, and the amount and type of collateral pledged.
Taylor also addresses terms such as billing cycle, cash advance and balance transfers as it relates to credit card accounts. He cautions that interest on a credit card is charged based on the outstanding/unpaid balance and advises that it is always wiser to pay off the amount owed before the end of the billing period to avoid high interest charges.
View the full discussion on the ECCB’s social media platforms using the handle ECCB Connects.