Jakarta – Indonesians are tearing up their useless credit cards, withdrawing everything from their bank accounts and learning to live in a creditless economy, said analysts and banks here.

As the rupiah spirals downwards to beyond 16,000 to the US dollar compared to 2,400 a year ago, and as banks fold and letters of credit dry up, people are turning to cash and barter.

"Business is good for me now," said textile retailer Sjaffuddin in Jakarta's Pasar Baru district. "But that's because I operate on cash. The ones that are suffering are the ones who need credit. They closed a long time ago."

Bank credit cards that once gave a drawing limit of up to US$2,900 (S$4,930) now yield under US$500. Even a gold card does not help much, and an officer at a local bank said people were destroying their cards. Those who earn US dollars from joint ventures or foreign firms say they do a roaring trade – outside the Indonesian banking system – by swopping dollars with rupiah earners either here or through banks in Singapore.

Mr Hartoyo Wignyowiyoto, an economist with the Asian Pacific Economic Consultancy, said barter is becoming a way out both for big businesses and small farmers.

The giant state oil and gas company, Pertamina, he said, is making do with quasi-barter deals to exchange the country's sweet crude for cheaper crude from the Middle East and China. And rice being one of the country's most valuable basic commodities, farmers are now trading it for soya bean, shoes and other basics.

"It is already happening. It doesn't show up on the state statistics, but it is happening in the case of rice," Mr Hartoyo said, referring to the off-the-books economy sprouting here.

The editor of Bisnis News weekly, Mr Sanyoto, said: "It's going in that direction. It's not there yet but it's on the way and much more so than, say two months ago. "People have no confidence in the banks and it is getting more and more difficult for the central bank to physically supply money. "People are withdrawing from banks, not just transferring, and if they transfer, it is to a foreign bank."

University of Indonesia economist Anwar Nasution said it was "natural" for Indonesians to return to what he called the "old traditional system of cash-and-carry".

In the last quarter of last year, when the bank runs started, housewives panicked "and bought everything in sight and the capital flight from Indonesia started". "We are still in that process," he said. So acute is the crisis that some say Bank Indonesia, the central bank, may collapse.