Banks hike interest rate on credit card dues

Aug 14: After the price hike in every sort of loans, now it’s a term for credit card as the major leading banks have hiked the interest rate on the credit borrowing. The increased range varies from 1-3 percent depending upon the bank’s individual policy, banks confirmed.

The users have to repay the interest of credit cards on the monthly basis that was from 2.5 to 3.5 percent per month before the implementation of this revision. Now interest rate will be 3.00 to 4.5 percent according to different bank’s rule and customer’s profile. Usually the credit card companies have a bill cycle of 30-45 days and the new statement of bill will pinch the pocket of the customer more.

ICICI Bank, the top leader in the credit card market has already hiked the interest rate 3-3.25 % which was earlier 2.75-2.99%.

"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," said Sachin Khandelwal, the head of credit card business for ICICI bank. ICICI have more than 8 million customers against the total market size of 23 million cards.

Sachin argues that the price hiked in every sort of interest include home loans up to 3 to 9 percent according to category, but the interest rate of the credit card remains same since last three years. So this price hike is not unreasonable.

Other market leaders include SBI Cards and ABN Amro has also increased the interest rate on credit borrowing. “We had raised the interest rates by 1-3% in different segments of customer profiles and our risk assessment. It is not across the board," said V-P Sumant Kathpalia, the executive of ABN Amro. It is now range between 3.15 and 3.20 percent against 3 percent earlier.

On the other hand, SBI Cards, a JV between SBI and GE Money, has increased the rates from 2.99% to 3.1% based on spending pattern and payment behaviour of the consumer.

However, HDFC and many other banks have not hiked the price. Some of the banks are reviewing about it but some Banks are firm to not to raise the price. “We continue to closely review the industry trends but have no immediate plans to raise the interest rates on credit card dues", informed HDFC bank.