New Delhi: When it comes to exorbitant interest rates, even the loan sharks — the neighbourhood moneylenders — can learn a few tricks from the banks which have raised the charges to as high as nearly 50% per annum for their credit card customers in the past few days.
Over the past few days, nearly all the banks — starting from PSU giant SBI to private sector leaders like ICICI Bank and HDFC Bank and foreign players such as Deutsche Bank and HSBC — have either raised or are in the process of raising the finance charges.
These rates, between 35 and 50% at present, are charged on credit card users for payments made after credit- free period, which ranges from 15 days to two months.
These are over three times the current benchmark prime lending rates of less than 15% at most of the banks.
The high rates are being charged despite a National Consumer Disputes Redressal Commission (NCDRC) ruling last month that “charging of interest at rates in excess of 30% per annum from the credit card holders by banks for the formers’ failure to make full payment on the due date or paying the minimum amount due, is an unfair trade practice”.
To top it all, these high charges, which varied between 30-40% till some days back, get a mention only in the asterix-marked fine prints of credit card statements and there is virtually no limit to what level these could be raised.
On their part, banks claim it has become necessary to raise these charges, which a customer has to pay after the expiry of his or her credit-free period, in the wake of tightened liquidity in the system.
However, while the hike in interest rate for secured lending products like auto and home loans have been mostly about 0.5- 1%, the unsecured credit card finance charges are being increased by about 10%.