Bank raises finance charges as high as 50% for credit card

The credit card customers will have to pay nearly 50% more as the banks in the past few days have raised the charges. Banks have raised the charges to as high as 50% per annum. The way banks are adopting methods to charge exorbitant interest rates from their customers, the neighborhood moneylenders can learn few tricks from them.

Nearly all the banks over the past few days – SBI the largest PSU bank to private sector banks like ICICI Bank and HDFC Bank and foreign players such as Deutsche Bank and HSBC, have raised the charges or in the process of raising the “finance charges”.

At present banks are charging between 35 and 50 per cent, from credit card users for payments made after credit- free period, which ranges from 15 days to two months. These charges are over three times the current benchmark prime lending rates of less than 15 per cent at most of the banks. See each 'n every credit card india information here before applying for a card.

Banks are charging high rates even though a National Consumer Disputes Redressal Commission (NCDRC) in ruling last month said, "charging of interest at rates in excess of 30 per cent 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".

Besides this, these high charges, which varied between 30-40 per cent till some days back, have been mentioned only in the asterix-marked fine prints of credit card statements and there is no mention of limit to what level these could be raised.

On the other side banks exclaim that it has become necessary to raise these charges in the wake of tightened liquidity in the system and a customer has to pay after the expiry of his or her credit-free period.

While the hike in interest rate for secured lending products like auto and home loans have raised about 0.5- 1.0 per cent, whereas the unsecured credit card finance charges are being increased by about 10 per cent.