Credit Card Interest Rate- The Supreme Court has allowed banks to charge higher interest on credit cards, overruling the 2008 decision of the National Consumer Court.
Credit Card Interest Rate- Credit cards are widely used in India. If you also use it, then pay its bill on time. If you do not do so, you may have to pay up to 50 percent interest. This has become possible after the Supreme Court removed the upper limit of 30 percent on credit card interest by the National Consumer Court. On Friday, the Supreme Court abolished the long-standing limit that protected consumers. A bench of Justice Bela Trivedi and Justice Satish Chandra Sharma gave this verdict while deciding on the petitions of banks like Standard Chartered Bank, Citi Bank, American Express and Hong Kong and Shanghai Banking Corporation (HSBC).
The National Consumer Court (NCDRC) had said in one of its decisions that it is not right to charge 36 to 50 percent annual interest from consumers on credit cards. The NCDRC had called it a wrong business practice and reduced the interest limit to 30 percent annually. The banks had approached the Supreme Court against this decision of the NCDRC. Giving relief to the banks, the Supreme Court removed the upper limit of 30 percent on credit cards.
While limiting the interest rate on credit cards to a maximum of 30%, the consumer court had accepted that the negotiations between banks and consumers are unequal. Consumers have no bargaining power for credit cards, except that they can refuse the facility of credit cards.
Foreign countries were cited
NCDRC had said in its decision in 2008 that the interest rate in the US and UK is between 9.99% and 17.99%, while in Australia it is between 18% and 24%. In developing countries like Philippines, Indonesia and Mexico, it is between 36% and 50%. There is no justification for adopting the highest interest rate in a large and developing country like India.
The banks raised the question before the Supreme Court whether the National Consumer Court (NCDRC) has the power to fix the maximum limit of interest rates charged by banks to their credit card holders in case of non-payment on the due date? The Supreme Court accepted that the consumer court does not have any such powers.
