Credit-card operators reckon raising interest ceiling to 18% only way to survive

Atis Ruchirawat, the club’s chairman and managing director at General Card Service Co, said on Sunday that the 16% interest rate ceiling may make it difficult for operators to cover their expenses due to the Bank of Thailand’s rising policy rates.

Currently, credit-card operators can charge their clients no more than 16% per annum for deferred payments.

The club, which is under the Thai Banker’s Association, will seek to discuss the option of raising the ceiling rate in the second half of this year with BOT.

“At 16%, it is the lowest rate in the world. If the policy interest rate rises, our profit margin will drop further and we may not be able to survive,” Atis added.

He said the club will also ask the central bank to consider postponing its rule for credit-card operators to raise minimum payments from 5% to 10% in two steps.

The BOT wants the minimum payment to be increased from 5% to 8% this year, and then to 10% next year.

Earlier, credit-card operators collected 10% of the spent balance as minimum payment. However, during the Covid-19 crisis, the central bank had them reduce the minimum payment rate to 5% to alleviate people’s burden.

Atis said the club fears that if the minimum payment rate is increased, it will affect users’ ability to repay their debt.

Compared to last year, the number of credit card accounts has risen by 3.1%, credit card spending by 15% and credit card debt by 4% this year.