Industry

Credit card interest capped at 20pc

The central bank says banks will not be allowed to charge more than 20 percent in interest on credit cards.

 

“Such decision was taken in order to make adjustment in interest and profit rates and also to protect the interest of bank clients,” a Bangladesh Bank circular said Thursday.

 

It said banks can charge interest on loans taken against a credit card only after expiry of the bill repayment date.

 

Banks cannot charge interest from the date of transaction, said the central bank.

 

Bangladesh Bank also said that banks cannot provide any cash withdrawal facility of over 50 percent of allowable credit limit against the credit card even if it is in any other form.

 

It said banks can only charge delay fee for a single occasion on delayed payment of bills.

 

The central bank said that such new guidelines were issued against the backdrop of the observations that many banks are charging higher interest rate against credit cards which goes against the interest of the bank clients.

 

This also creates risk for banks as well, said the BB.

 

Source: United News of Bangladesh