American-style credit ensnares consumers overseas

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"We did not listen to our ancestors' proverb," Kaya said. " 'Stretch your leg only as far as your blanket.' "

Few American exports have proved as popular as credit cards. In just a generation, they have gone from a totem of Western affluence to an everyday accessory in Brazil, Mexico, India, China, South Korea and elsewhere. More than two-thirds of the world's 3.67 billion payment cards circulate abroad.

This global shopping spree has turned Visa and MasterCard into Wall Street wonders: Visa completed the largest stock offering in American history in March, and MasterCard's shares have risen almost 500 percent since the company went public in 2006.

Their real opportunities for higher profits lie abroad. The card issuers make their money by collecting a fee on each card and a tiny percentage on purchases. (Banks primarily make their profit by charging interest.) In Asia, Latin America and Central Europe, card transaction volume is rising 20 to 30 percent a year, more than twice the growth rate in the United States.

But when credit cards are handed out to unsophisticated consumers — as they often are in shopping malls, factories and university campuses in middle-income developing countries — they can pile up debts that can take years to pay off, if they ever are.

In South Korea, for instance, a surge of defaults in 2003 set off a national crisis. Now industry experts say they see similar dangers in rapidly growing markets like Turkey and China, where there are more than 100 million cards.
http://www.iht.com/articles/2008/08/10/business/10card.php