WORLDWIDE IT IS KNOWN THAT credit card holders often experience financial difficulty in managing the debt accumulated. This situation is prevalent among students, single males, not forgetting newlyweds, who try to "keep up with the Joneses".

It is true that some card issuers encourage students to use cards while unemployed. They are given modest lines of credit, the objective being to get them used to the feel and pleasure of shopping with "plastic" but more important, to lock them in as customers after graduation when generous limits are offered, unsolicited.

Readers would have recently recalled the comments of one of our local leading bankers, Horace Cobham, that card business is more lucrative than consumer loans. Of course, basically a credit card line of credit is, in effect, consumer financing except often on an unsecured basis, although in recent times some applicants have been asked for and made to provide cash security to cover the relevant credit card limit.

It is this type of deal, inter alia, that makes the credit card business so lucrative for the issuing bank. Not only are they holding cash cover equivalent to or in excess of the exposure for which they are paying a modest rate of interest, while in turn charging the cardholder upwards of 23 per cent per annum. On top of this there are other collateral fees such as annual subscription of $75; late fees of $60 or more; excess of limit fees and to crown it all, a still higher rate than the annual rate of interest for cash advances.

It is doubtful most credit card users, particularly those with slender resources, are aware that payments made monthly are applied firstly to any cash advances taken, secondly to amounts in arrears and the balance to current payments due.

Of course, there are some credit cards which do not call for an annual fee but one can safely expect the rate to be higher, in most cases, than a card which does. And so, given the financial crisis existing, given the high cost of food, energy, transport and airfares, the temptation to lean more heavily on credit cards is all but certain. Surely Cobham's view is one of caution, as it should be, rather than merely to take the position that if the applicant meets given criteria then "away we go". Part of a banker's responsibility is to protect the customer from himself.

At every turn, particularly in North America and other areas of the developed world, credit card promotion is a major part of marketing strategy. However, whilst we understand the need to make profits, we ought not to allow ourselves to be captured by similar inspired greed which has led to the United States fiasco.

Our banking system, up to now, can pride itself on being considered prudent, safe, not aggressive but above all sound. We should do everything not to spoil this image, more so since we know tourism, our major industry, may show a decline.

Credit cards are dangerous tools in a recessionary climate.