Mumbai: Credit cards will now pinch your pockets more as leading banks have hiked interest rates charged on card dues by 1-3% a month in the last two-three months.
Credit card companies usually have a bill cycle of 30-45 days, beyond which they charge monthly interest rate.
Market leaders like ICICI Bank, SBI cards and ABN Amro have already hiked rates on review of their cost of funds or a routine need to align with the industry.
By far, ICICI is the market leader in the credit card business with over 80 lakh credit cards against the total market size of 2.3 crore cards.
Giving rationale of the hike, ICICI Bank Credit Card Business Head Sachin Khandelwal told PTI that interest rates on home loans had increased by 3-4% and the rates on credit cards had not been revised for almost three years.
“We have revised the rates after reviewing our cost of fund and also to align with the industry which is charging in the range of 3-3.25% per month,” they said.
Its close private sector competitor HDFC Bank, however, is unlikely to hike the rates in the near future.
“We continue to closely review the industry trends but have no immediate plans to raise the interest rates on credit card dues”, Bank’s official spokesperson said.
HDFC is charging 2.75-2.95% a month for different category of customers.
Foreign banking major and a leading credit card issuer ABN Amro had revised the rates about three months back, but it was not across the board, ABN Amro executive vice-president Sumant Kathpalia said.
SBI Cards, a joint venture between State Bank of India and GE Money, too has hiked interest rates from 2.99% to 3.1% based on spending pattern and payment behaviour of the consumer.