Credit_cards

Credit cards in the Czech Republic:
recent history and present
Jan Zika
EM046 April 2006
Term paper
Institute of Economic Studies
E-mail: janzika@gmail.com Faculty of Social Sciences
WWW: http://zika.czweb.org Charles University in Prague

Credit cards in the Czech Republic Jan Zika1
Introduction
The number of credit cards issued and used in the Czech Republic is increasing quickly, and
these figures are worth a closer inspection. This paper outlines the latest developments in the
consumer card market and examines two prevalent types of products—revolving credit cards
issued by consumer loan companies and bank-issued credit cards. The main features of these
products, recent historical developments and the current issuers and their products are
presented for both types. For revolving credit cards, a detailed comparison of the most
prevalent products is presented. For bank-issued cards, a link to an online service that enables
side-by-side comparisons of selected products is provided.1
At the end, this paper compares
both types of credit cards along several basic criteria.
Latest developments in the consumer card market
The vast majority of payment cards in the Czech Republic are debit cards linked to banking
accounts. Debit cards saturated the market for retail payments in the 1990s as new, convenient
and relatively save instrument. Originally, most personal banking packages included a non-
embossed2
debit card. This contrasts with other developed markets, such as the USA, where
cards were originally used to provide credit, and only later became a more universal payment
instrument detached from the credit function.
According to SBK (2005b), the card market of Central and Eastern Europe was, in 2004,
characterized by the prevalence of debit cards (88%), followed by credit cards (8%) and lastly
charge cards (4%). At the same time, in the Czech Republic, the share of credit cards was
1
In this case presenting collected data on all cards at the same time would be unproductive and redundant.
2
Merchants must have electronic POS terminals to be able to accept non-embossed cards.

relatively high compared to other Central and Eastern European countries.3
The vast majority
(97%) of cards were issued by financial institutions. However, the source cited by
SBK (2005b) may have not had sufficient data about non-banks that issue a large number of
cards (such as GE Money Multiservis, a.s., Home Credit, a.s. and CETELEM R, a.s.4
in the
Czech Republic). Credit cards had the highest average transaction value (44 euros) in
comparison to debit cards (36 euros) and charge cards (41 euros).
In the Czech Republic, the number and the value of transactions are on an upward trend.
Table 1 summarizes the data on all banking and some non-banking cards issued and accepted
in the Czech Republic. Of the non-banking cards, the cards issued by Diners Club Czech5
and
CCS6
are included. The table contains so-called issuing statistics, which are based on the data
about active cards registered in the databases of issuers. The credit category also includes
charge cards.
Between 2000 and 2004, the number of credit cards in circulation grew significantly faster
then the number of debit cards. This was most likely due to the low market saturation in the
banking credit card segment. While the number of debit cards grew 57%, the number of credit
cards grew 890%. The overall number of transactions grew 677%, while the aggregate value
of transactions grew 355%.
3
Note that figures may not be comparable across multiple sources as precise definitions of card types are often
unavailable. For example, according to SBK (2005), the share of credit cards on the total number of cards was
only about 5.4%, as opposed to over 10% according to the “Payment Cards Central and Eastern Europe 2006”
report by Retail Banking Research quoted in SBK (2005b).
4
“GE Money Multiservis”, “Home Credit” and “CETELEM” respectively will be used to refer to these issuers.
5
Diners Club Czech issues charge cards. Therefore its cards are not included in the rest of this paper.
6
The use of CCS cards is mostly limited to gas stations, LPG stations, car service workshops, tire shops and
services, car washes, spare parts shops, and some hotels and restaurants. Although it may also provide credit,
CCS specializes in management of company car-cards, loyalty programs, logistics management and cost-
checking services for company car pools.

Table 1
Issuing statistics for the Czech Republic (2000–2004)
2000 2001 2002 2003 2004
2000–2004
growth factor
Number of cards (millions) 3.96 4.66 5.30 6.37 6.87 1.73
- debit (millions) 3.75 4.50 5.20 5.83 5.87 1.57
- credit (millions) 0.04 0.05 0.10 0.20 0.37 9.90
- other (millions) 0.17 0.11 0.00 *) 0.34 0.62 3.57
Number of transactions (millions) 10.74 21.89 35.82 67.65 83.49 7.77
Value of transactions (CZK billions) 20.16 32.90 42.48 77.59 91.73 4.55
Number of ATM withdrawals (millions) 76.42 97.58 108.81 118.10 119.82 1.57
Value of ATM withdrawals (CZK billions) 160.87 226.86 268.31 344.85 382.43 2.38
Note: Growth factors are based on original numbers before rounding.
*) 4,381
Source: SBK (2005)
Chart 1 shows the total numbers of different kinds of cards in circulation.
Chart 1
Number of cards in the Czech Republic (2000–2004)
1
2
3
4
5
6
7
2000 2001 2002 2003 2004
millions
- other
- credit
- debit
Source: SBK (2005)

Table 2 shows the year-to-year percentage increases in the number of credit and debit cards
and all payment cards in aggregate. It again shows that the growth rate for credit cards
significantly exceeded the growth rate for debit cards.
Table 2
Year-on-year percentage increases in the number of cards in the Czech Republic for
years 2000–2004
2001/2000 2002/2001 2003/2002 2004/2003
All cards 17.62 13.68 20.35 7.75
- debit 20.14 15.31 12.24 0.75
- credit 28.74 101.21 108.21 83.46
Source: SBK (2005)
The data from the previous table is depicted in Chart 1.
Chart 2
Year-on-year percentage increases in the number of cards in the Czech Republic for
years 2000–2004
0
20
40
60
80
100
120
2001/2000 2002/2001 2003/2002 2004/2003
%
All cards
- debit
- credit
Source: SBK (2005)

Despite the increasing share of credit cards issued by banks, the Czech market is still
dominated by the non-bank issuers such as GE Money Multiservis, Home Credit and
CETELEM.
Features of bank-issued and revolving credit cards
Common credit cards issued by Czech banks are payment instruments that can be used for
purchases and cash advances. Customers may or may not be charged fees for account
maintenance and for statement delivery, and if present, such fees may depend on the purchase
activity on the cards. Normally, clients are provided an interest-free loan from the issuer until
the end of the grace period if they do not carry a balance and pay off the last bill in full by the
end of the grace period. The grace period does not usually apply to cash advances and ATM
withdrawals, where the interest accrues immediately.
If credit card holders maintain a balance, they are charged interest according to the provisions
of the contract. In developed financial markets, the interest rate depends on a customer’s
credit profile (or so called credit “score” based on different factors). Clients can choose any
monthly repayment amount which is higher than the minimum required installment. The
minimum installment is set as a percentage of the outstanding balance and is printed in the
credit card bill.
The annual interest rate charged on credit cards is high because the loans are not secured.
Banks usually impose very strict sanctions for late payments, for failing to pay the minimum
installment, and for exceeding the credit limit. In these cases it is not uncommon for the
interest rate to be over 50% p.a.

Revolving credit cards issued by non-banks are to similar to conventional credit cards, but
there are differences in the way they function. For example, there is no grace period for
repayment of the credit without interest, and the minimum repayment amount is not derived
from the outstanding balance, but depends on the available credit. The methods for calculating
the interest may also differ.
With a revolving credit card, the customer is provided with credit that can be used for
virtually any purchase. The analogy of a water-tank that can be refilled is often used to
explain the principle. The customer’s revolving account records the credit drawn and the
remaining amount that is available. The customer chooses the size of the credit facility when
establishing the account, and is usually allowed to change it afterwards without a charge. The
size of the facility is important because it determines the total value of purchases the customer
can buy on credit, and also because it determines the minimum monthly repayment.
With a revolving credit card, the issuer may require a minimum transaction value for
purchases (and may further require different minimums for first and subsequent purchases),
and there may be a fee on opening the account based on the size of the intended credit facility
or on other factors. The customer usually received monthly paper statement, and with some
providers, customers can view the current status of their account on the Internet.
Revolving credit cards
Historical developments
As Ji íková (2006) notes, before 1997 obtaining a consumer loan meant a significant
administrative hassle. Most lenders only provided specific-purpose loans and required two
guarantors. Although some credit card products existed, they were far from widespread. In
1997, this changed dramatically when GE Money Multiservis (then named GE Capital

Multiservis) introduced a consumer loan product with an instant approval (within 30 minutes)
and not requiring a guarantor. GE Money Multiservis followed with credit cards based on
revolving credit, and those became very popular with consumers.
Reacting to the popularity of credit cards provided by consumer loan companies, Czech banks
came up with new products based on the conventional credit cards from developed consumer-
credit markets, such as the USA and Europe.
The history of GE Money Multiservis can be traced back to 1966 and the state enterprise
Multiservis that specialized in consumer loans for television sets. Multiservis was privatized
in 1993, and in 1997 it was acquired by GE Consumer Finance. The company introduced the
“O.K. karta” in 1998—the first card providing revolving credit in the Czech market. GE
Consumer Finance changed its name to GE Money in January of 2005.
Along with GE Money Multiservis, two other non-bank issuers dominate the market for credit
cards in the Czech Republic—Home Credit and CETELEM.
CETELEM was founded on November 23, 1996 and started its business activities on May 29,
1997. In June 2002, CETELEM became a member of MasterCard International association.
The first “Karta Aura” with MasterCard Electronic™ was issued in September 2003. In the
following 2 years, CETELEM issued roughly 500,000 cards.
Home Credit, a.s., founded in 1997, was one of the business ventures of the PPF holding.7
Home Credit started to provide consumer loans in 1998 when it established Home Credit
7
In 2005, the consumer loan activities on the Czech market were concentrated under Home Credit, a.s. as a part
of a corporate restructuring aimed at setting up separate corporate entities according to the geographic markets

Finance, a.s. In 2000, Home Credit in cooperation with Expandia Banka issued the first
universal (brand) credit card in the Czech Republic. Its “Karta YES” card became the first
Czech credit card to be used internationally where Maestro was accepted (including cash
withdrawals at ATMs).
Current issuers and their products
The biggest consumer loan provider in the Czech market is GE Money Multiservis. It offers
its credit products at 6,350 brick-and-mortar retail stores and at 60 Internet stores. Customers
can use GE Money Bank’s ATMs (370 in the Czech Republic) to withdraw cash. In 2005, GE
Money Multiservis provided loans totaling almost CZK 9 billion. It offers personal loans
(“Expres p j ka”, CZK 30,000–200,000), consumer loans (“Multiservis úv r”, CZK 3,000–
75,000) and credit cards.
In 2005, the company issued almost 109,000 of its “MoneyCard” credit cards (the total
number of active cards was approximately 137,000 at the end of 2004), and it thus became the
second most widespread credit card in the Czech market. “MoneyCard” is a conventional
credit card with similar features to those of bank-issued cards. At the same time, GE Money
Multiservis also offers “O.K. karta”, its older product based on revolving credit.
CETELEM provided loans for CZK 7.4 billion in 2005, which represented a year-on-year
increase of 26%. Its “Karta Aura” card enables payments at more than 35,000 merchants in
the Czech Republic and cash withdrawals at more than 2,700 ATMs. It also enables payments
at numerous Internet stores. The “Klub Aura” incentive program offers discounts for various
leisure activities.
they serve. Home Credit, a.s. currently is owned by eská pojiš ovna, a.s., whose majority owner is PPF
Group, N.V.

In August of 2005, CETELEM started issuing the “Karta Aura”, with the MasterCard logo,
that can be used abroad. CETELEM has over 870,000 customers. It offers personal loans
(“Osobní p j ka” and “ON-LINE p j ka”, CZK 5,000–500,000), consumer loans
(“Spot ebitelský úv r v prodejnách”, CZK 3,000–500,000) and “Karta Aura” credit cards.
Home Credit provided loans totaling over CZK 6.7 billion in 2005, which represented an 8%
year-on-year increase. It offers personal loans (“Bezú elová hotovostní p j ka”, CZK 10,000
or CZK 15,000), consumer loans (“Spot ebitelský úv r Home Credit”, CZK 3,000–100,000),
and credit cards. By the end of 2005, Home Credit’s “St íbrná karta” was used by almost
500,000 customers. Home Credit offers its services at more than 5,000 vendor locations. Its
“St íbrná karta” enables customers to obtain revolving credit at partner stores and to make
purchases at merchants accepting the Maestro card in the Czech Republic and abroad. The
card also allows ATM withdrawals.
Comparison of main products on the market
Cards issued by GE Money Multiservis (“O.K. karta”), Home Credit (“St íbrná karta”) and
CETELEM (“Karta Aura”) are quite similar in the way they function. The minimum credit
limit is the same for all products—CZK 10,000, but the maxium differs significantly. The
highest is offered by GE Money Multiservis (CZK 75,000), and the lowest by Home Credit
(CZK 30,000). “Karta Aura” and “O.K. karta” enable the holder to find out the current
outstanding balance over the Internet.
Monthly interest rates are 1.78% (21.36% p.a.) for “Karta Aura”, 1.89% (22.68% p.a.) for
“O.K. karta” and 2.22% (26.64 p.a.) for Home Credit’s “St íbrná karta”.8
“Karta Aura” has an
8
The p.a. rates do not represent the average interest rate paid by a customer. The actual interest charged depends
on the repayment schedule. Interest paid in one period is added to the base for calculation of the interest in the
next period, therefore the average interest rate relative to the principal is always higher than the p.a. rates.

annual fee of CZK 150 after the first year, whereas the other products have no annual fee. GE
Money Multiservis charges a monthly fee of CZK 40 if there is any activity on the account in
a given month. The other providers do not charge a monthly fee, but do charge fees for
sending account statements of CZK 36 (CETELEM) and CZK 27 (Home Credit).
All companies impose high late payment fees that are based on a percentage of the delayed
payment. Late payments are also subject to strict sanctions in the form of additional interest
(0.08% and 0.1% daily for CETELEM and GE Money Multiservis respectively). The
minimum monthly repayment is 4%–5% of the credit limit.9
None of the cards offer any grace
period, which means that the customers always pay an interest on purchases.
All cards allow customers to change the credit limit, and also allow cash advances.
CETELEM and GE Money Multiservis offer insurance against the inability to pay off the
outstanding balance due to reasons such as physical disability, inability to work for health
reasons, loss of employment, fraud (by third party), or even death of the client.
“Karta Aura” and “St íbrná karta” carry MasterCard and Meastro logos respectively, and can
be used at compatible POS terminals and ATMs in the Czech Republic and abroad. “O.K.
karta” can only be used at GE Money ATMs in the Czech Republic. All cards charge extra
fees for withdrawing money from ATMs, although customers may be allowed several free
withdrawals per month (see Table 3 for details). For foreign withdrawals, CETELEM and
Home Credit charge 1% of the amount being withdrawn with a minimum charge of CZK 100.
Table 3 summarizes the features of the different cards.
9
GE Money Multiservis imposes a CZK 500 lower bound on the minimum repayment.

Table 3
Main features of non-bank issuers of credit cards in the Czech Republic
Company CETELEM, a.s. Home Credit, a.s. GE Money Multiservis, a.s.
Legal status corporation corporation corporation
Ownership structure CETELEM S.A., France
Home Credit B.V.
(> eská pojiš ovna, a.s.
> PPF Group N.V.)
GE Capital International
Holdings Corporation (USA)
Founded 1996 1997 1966 (1993)
Card Karta Aura
St íbrná karta
(formerly Karta YES)
O.K. karta
Balance enquiry over the
Internet
yes no yes
Credit limit (CZK thousands) 10–60 10–30 10–75
Annual fee
no fee in the first year,
then CZK 150
no no
Monthly fee no no
CZK 40 if there is any
activity on the account
Cash advance yes yes yes
Changing the credit limit yes yes yes
Insurance for inability to
repay the loan
physical disability,
inability to work for health
reasons, death, loss of
employment, fraud
not mentioned on the
official site
physical disability, inability
to work for health reasons,
death, loss of employment
(through POJIŠ OVNA
CARDIF PRO VITA , a.s.)
Card type
MasterCard,
MasterCard Electronic
Maestro proprietary
ATM withdrawals in the
Czech Republic
first 3 withdrawals in a
month are free, other with
a fee of CZK 45 and 0.5%
of the amount (CZK 100
max.)
1% of the amount
(CZK 85 min.)
first withdrawal free,
then CZK 49 (in GE Money
ATMs only)
ATM withdrawals abroad
1% of the amount
(CZK 100 min.)
1% of the amount
(CZK 100 min.)
n/a
Fee for sending an account
statement
CZK 36 CZK 27 no
Late payment fee 8% of the payment
Undisclosed, specified in
the contract
20% of the payment
(CZK 100 min.)
Additional interest on late
payments
0.08% daily
Undisclosed, specified in
the contract
0.1% daily
Minimum payment 5% of the credit limit 4% of the credit limit
5% of the credit limit
(CZK 500 min.)
Grace period no no no
Incentive scheme Klub Aura
not mentioned on the
official site
not mentioned on the official
site
Monthly interest rate 1.78% 2.22% 1.89%
Source: author’s research of respective firms’ commercial offers

Bank-issued credit cards
Historical developments
The first Czech bank to offer a credit card was eská spo itelna in 1998. Initially, only a
relatively small group of selected customers with good transaction histories were offered the
card. The business expanded in 2000 when Bank Austria Creditanstallt (now called HVB
Bank) also started issuing credit cards, and 2001 and 2002 are often considered to be the
significant starting point for bank-issued credit cards in the Czech Republic.
After 2002, a great variety of bank-issued credit cards emerged. Some of these products are
listed together with their issuers in Table 4. The cards on the markets differed in brand (of
card association), intended usage, target customer group, interest rate, grace period, annual
fee, credit limit, minimum repayment, transaction fees etc. Also the conditions of issuance
varied. Most cards were issued based on credit evaluation performed by individual banks,
although some cards were “pre-issued”, meaning that they were issued purely on the basis of
customer’s profile and account balance history. Some bank-issued cards required the
customer to maintain a current account with the bank, while others were not restricted in this
way.
By 2006, most banks allowed customers to pay their credit card bills online through an
electronic transfer initiated in the bank’s Internet banking service. Some customers were even
able to set up automatic direct debits drawn from their current accounts and covering up to
100% of the credit card outstanding balance (e.g. Citibank).10
Most credit cards were usable
abroad and on the Internet.
10
With a 100% automatic repayment, customers can effectively use their credit cards as charge cards.

Current issuers and their products
Table 4 lists 27 bank-issued credit card products available to consumers in April 2006.
Furthermore, there were also several charge cards,11
which are excluded from the list. The
individual products varied across a great number of relevant characteristics. Penize.cz (2006)
offers a useful and relatively comprehensive tool for comparing the different products.
Table 4
Bank-issued credit cards available on the Czech market in 2006
Issuer Product name
Citibank Kreditní karta Classic
Kreditní karta Gold
eská spo itelna Kredit + MC Gold
Kredit + MC Gold Univerzita Karlova
Kredit + MC Partner
Kredit + MC Partner Univerzita Karlova
Kredit + VISA Classic Partner
Kredit + VISA Electron
Kredit + VISA Gold
eskoslovenská obchodní banka Kreditní karta
HVB Bank Kreditní karta VISA Classic
Kreditní karta VISA CREDIT SUISSE
Kreditní karta VISA Electron iDnes
Kreditní karta VISA Generali
Kreditní karta VISA Gold
Kreditní karta VISA iDnes
Kreditní karta VISA Škoda Auto
Kreditní karta VISA/ SA
Hypote ní banka *) Kreditní karta
Komer ní banka Kreditní karta MasterCard
Kreditní karta VISA Electron
Raiffeisenbank National Geographic
VISA Classic
VISA Gold
Živnostenská banka VISA Credit Classic
VISA Credit Gold
VISA Golf
*) The credit card of Hypoten ní banka is only issued to clients who have a mortgage with the bank.
Source: Penize.cz (2006)
11
Such as the cards of Diners Club Czech, American Express and eBanka

Comparison of bank-issued credit cards
and revolving credit cards
Table 5 compares the key features of credit card products from the major Czech banks and
consumer loan companies. The bank data is based on Šalanda (2006), who compared
regularly offered products excluding special offers and pre-issued12
electronic cards.
Home Credit does not charge an annual fee on its “St íbrná karta”, although it charges fees for
sending account statements. Assuming 12 statements in a year, these fees amount to CZK 324
per year. Of issuers who charge an annual fee, CETELEM has the lowest, but its charges for
paper statements, could significantly exceed the official annual fee.
eská spo itelna had the lowest annual fee of the banks (CZK 300). Komer ní banka and
Živnostenská banka were among the highest with CZK 590 and CZK 600 respectively. The
differences in annual fees reflect the different features and additional services provided with
the cards.
When credit cards are used to obtain credit beyond the grace period (and thus not only used as
charge cards), the monthly interest rate becomes a more significant cost than the annual fee.
Table 5 compares annualized rates. Because non-bank products do not provide a grace period
this increases the interest charged to their customers when compared to a hypothetical bank
card with the same nominal rate.
The table provides a basic idea about the relative size of the interest rates, but it is difficult to
obtain exactly comparable numbers because Czech banks do not publish the methods they use
to calculate interest. With the consumer loan companies, the situation is even more difficult,
12
Cards issued without a credit evaluation and based solely on the client’s account history and average balance.

because the so-called APR13
varies depending on the account features and usage. Despite the
limitations of the comparison, one can still observe that Živnostenská banka and Komer ní
banka charged the lowest rates of 15.4% p.a. and 18.9% p.a. respectively,14
and the Citibank
and Home Credit charged the highest, with 26.4% and 26.64% respectively.
Credit limits for bank-issued cards ranged from 10,000 to several hundred thousands CZK.
For most issuers, the maximum was below two hundred thousand. Citibank, catering to
customers with relatively high income and high turnover or balances on their personal bank
accounts, offered a maximum credit limit of CZK 600,000. The second highest limit was
CZK 250,000 from eskoslovenská obchodní banka.
Citibank offered the longest maximum grace period15
(55 days), followed by GE Money
Multiservis “MoneyCard” (50 days). The remaining bank-issued cards offered a maximum
grace period of 45 days. As mentioned previously, revolving credit cards have no grace
period.
13
Annual percentage rate (APR) is an annual interest rate, which includes all fees and costs paid to acquire the
loan, and which should be calculated in a standardized way, so borrowers can compare different credit products.
14
This seems to correspond to the highest annual fees charged by these banks.
15
Maximum grace period (or grace period) extends from the beginning of the billing period to defined number
of days beyond the end of the billing period. The length of the grace period is the maximum number of days for
which a customer can obtain an interest-free loan from the issuer. The grace period only applies to customers
who do not carry a balance and who pay off their last bill in full by the end of the grace period. In the Czech
Republic, the grace period is usually 30 to 50 days long.

Table 5
Some features of credit cards issued by Czech banks and consumer loan companies
Bank
Annual fee
(CZK)
Annualized
interest rate
Credit limit
(CZK thousands)
Max. grace period
(days from
purchase) 1)
eská spo itelna 300 2) 19.80 25–149 45
CETELEM 150 [+432] 7) 21.36 10–60 0
Citibank 500 5) 26.40 12–600 55
eskoslovenská obchodní banka 400 2) 19.20 [21.60] 3) 15–250 45
GE Money Multiservis 9) 399 4) 19.80 10–150 50
GE Money Multiservis 10) 480 8) 22.68 10–75 0
Home Credit 0 [+324] 11) 26.64 10–30 0
HVB Bank 360 2) 23.40 10–180 45
Komer ní banka 590 18.90 6) 30–150 45
Raiffeisenbank 420 2) 22.68 20–150 45
Živnostenská banka 600 15.40 10–150 45
Notes:
The table compares the cheapest embossed credit cards (Visa Classic or MasterCard Standard) issued
independently, not as a part of banking packages.
1) Assuming a usual monthly billing period (30 days), a 45-day maximum grace period means a grace
period of 15 days from billing.
2) The fee does not include insurance.
3) The lower rate applies to clients who have opened a current account with the bank.
4) The annual fee is waived in the first year and in any year in which the annual purchases exceed
CZK 48,000.
5) The fee is waived for annual purchases totaling over CZK 36,000.
6) MasterCard credit card, KB also offers Visa Electron with an interest rate of 21.90 p.a.
7) The fee is waved in the first year. A CZK 36 fee is charged for sending an account statement. Assuming
a customer would receive the statement monthly, these fees would add up to CZK 432 per year.
8) Assuming there is activity on the account in every month of the year. The monthly fee of CZK 40 is
waved if there is no activity on the account in the particular month.
9) “MoneyCard”.
10) “O.K. karta”.
11) A CZK 27 fee is charged for sending an account statement. Assuming a customer would receive the
statement monthly, these fees would add up to CZK 324 per year.
Source: CETELEM (2006), Home Credit (2006), GE Money Multiservis (2006), KB (2006),
Šalanda (2006)

Conclusion
The vast majority of payment cards in the Czech Republic are debit cards. At the same time,
the number of credit cards in circulation is growing quickly. Despite the increasing share of
credit cards issued by banks, the Czech market is still dominated by the non-bank issuers of
revolving credit cards. In 2006, the biggest of these were GE Money Multiservis, Home
Credit and CETELEM.
Revolving credit cards were introduced to the Czech market by GE Capital Multiservis in
1997. The first Czech bank to offer a conventional credit card was eská spo itelna in 1998.
However, the wider market acceptance of bank-issued credit cards in the Czech Republic
came in 2001 and 2002. By 2006, a great variety of bank-issued credit cards had emerged, and
over two dozen products were available on the market.
The maximum grace period of bank products ranged from 45 to 55 days. Unlike conventional
credit cards, revolving credit cards usually do not provide a grace period for repayment of the
credit without interest. Also, the minimum repayment amount is not derived from the
outstanding balance, but depends on the available credit. The methods of calculating the
interest may differ as well.
Comparing products of banks and non-bank issuers, one notices that non-bank products have
lower or even zero annual maintenance fees. However, this cost savings may be outweighed
by account statement fees. Živnostenská banka and Komer ní banka charged the lowest
monthly interest rates of 15.4% p.a. and 18.9% p.a. respectively. On the end of the range were
Citibank and Home Credit charging 26.4% and 26.64% respectively. The highest available
credit limits of most issuers were below two hundred thousand CZK.

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Appendix: Selected statistics
Table 6
Comparison of main figures of the Czech card market in the 3rd
and 4th
quarter of 2003
and in the years 2002 and 2003 (acquiring statistics)
3.Q 2003 4.Q 2003 increase % 2002 2003 increase %
Number of merchants 47,433 48,723 2.72 40,224 48,723 21.13
EFT POS 30,220 31,678 4.82 25,439 31,678 24.53
Number of transactions 21,250,319 23,574,235 10.94 42,500,466 80,373,983 89.11
Volume of transactions 24,183,668 27,682,031 14.47 51,442,921 92,558,911 79.93
Number of ATMs 2,561 2,669 4.22 2,350 2,669 13.57
Number of withdrawals 29,723,283 30,689,206 3.25 108,249,306 116,825,220 7.92
Volume of withdrawals 91,081,716 98,556,790 8.21 292,493,921 352,253,009 20.43
Source: European Card Review reprinted in SBK (2004)
Table 7
Comparison of main figures of the Czech card market in the 3rd and 4th quarter of
2003 and in the years 2002 and 2003 (issuing statistics)
3.Q 2003 4.Q 2003 increase % 2002 2003 increase %
Number of cards 6,199,519 6,373,591 2.81 5,296,067 6,373,591 20.35
- chip cards 1,326,975 1,428,732 7.67 800,551 1,428,732 78.47
Number of transactions 17,799,148 20,610,100 15.79 35,815,952 67,652,432 88.89
Volume of transactions 19,964,350 24,065,172 20.54 42,484,356 77,588,299 82.63
Number of ATM withdrawals 30,469,160 31,272,869 2.64 108,807,976 118,096,693 8.54
Volume of ATM withdrawals 88,255,467 96,378,130 9.20 268,310,261 344,853,470 28.53
Source: European Card Review reprinted in SBK (2004)

Table 8
Average value of annual purchases with VISA and MasterCard in selected countries in
2002 (per one card)
Rank Country
Average annual
purchases per
one card (USD)
Volume of
transactions
(USD million)
Number of
cards issued
(thousands)
1. Iceland 9,566 3,874.3 405
2. Denmark 5,747 14,097.9 2,261
3. Bermuda 5,566 423.0 76
4. Israel 4,966 18,031.9 6,631
5. Norway 4,779 27,877.6 4,578
6. France 4,541 164,176.2 36,152
7. Luxembourg 4,084 1,499.0 367
8. Montserrat 3,750 7.5 2
9. Sweden 3,582 21,402.8 5,975
10. Switzerland 3,525 11,059.9 3,138
15. U.K. 2,753 247,742.0 89,975
20. Belgium 2,095 5,875.7 2,805
23. Austria 1,931 3,574.6 1,851
26. U.S.A. 1,712 1,798,730.0 700,200
28. Slovenia 1,659 570.8 344
35. Italy 1,428 27,364.2 19,169
40. Germany 1,315 25,023.0 19,033
49. Spain 964 40,994.2 42,521
58. Japan 784 88,080.6 112,293
79. Czech Rep. 356 1,123.8 3,155
81. Hungary 332 935.2 2,816
83. Poland 327 3,070.4 9,396
84. Croatia 309 455.5 1,473
87. Russia 272 1,253.8 4,618
94. Slovakia 208 232.2 1,116
109. Romania 30 56.3 1,861
Source: The Nilson Report cited in SBK (2004)

Chart 3
Average value of annual purchases with VISA and MasterCard in selected countries in 2002 (per one card)
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
IcelandD
enm
arkBerm
uda
IsraelN
orw
ay
France
Luxem
bourg
M
ontserratSw
eden
Sw
itzerland
U
.K.Belgium
Austria
U
.S.A.Slovenia
ItalyG
erm
any
Spain
Japan
C
zech
R
ep.H
ungary
Poland
C
roatia
R
ussiaSlovakiaR
om
ania
USD
Source: The Nilson Report cited in SBK (2004)

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