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+--- Thread: Banks increase mark-up rates on credit card users (/showthread.php?tid=748)
Banks increase mark-up rates on credit card users - LRE - 08-15-2008 12:30 PM
Banks increase mark-up rates on credit card users
* Mark-up rates for Balance Transfer Facility, personal loans, revolving loans, running finance also increased
By Nauman Tasleem
LAHORE: Most of the banks in the country have revised their mark-up rates for credit card users from September 1 to 2.5-3.25 percent per month or around 30-39 percent per year, banking industry sources told Daily Times.
The banks have also revised upwards the mark-up rates for Balance Transfer Facility (BTF), personal loans, revolving loans, running finance etc. The mark-up rates for cash withdrawal through credit cards have also been increased, said an official of a bank.
Though a couple of banks have not revised their mark-ups, but they would have to eventually raise the interest rate due to the increase in the discount rate by the State Bank of Pakistan, said a banker Sadeed Ather.
He said that Pakistani banks are charging the highest mark-ups in the world but even then they have increased mark-up rates. “If you compare local credit cards with those of international banks, it is astonishing to note that the difference is more than double,” he said adding that there are around seven million credit card customers in the country.
The banks are also charging late payment, over-limit and non-payment charges, which stand at a minimum of Rs 500 and in many cases, more than Rs 700.
The banks also charge cash advance fees, which is Rs 500 or minimum three percent of the transaction amount.
Such charges only stood at around Rs 300 a couple of years back.
Credit card customers are left at the mercy of the banks that enjoy a free hand to charge excessive amounts of money at will.
Recently, a number of banks have also been found charging undue penalties from their customers.
Credit card customers have expressed annoyance over the banks’ decision to increase mark-up rates, saying that banks are pushing their customers to the wall. They said banks are already charging high mark-up rates, late payment and over-limit penalties and now a further increase in mark-up rates is an unjust move.
“I am a frequent credit card user and always pay full credit payments to avoid late payment penalty but could not make full payment last month due to financial constraints,” said a credit card user Khalid Mehmood, adding that he was charged Rs 1,180 for an outstanding amount of Rs 24,000.
“Is it fair that banks charge such a high amount of penalty?” Mehmood lamented. He said that the SBP should come forward to rescue customers, or otherwise the default rates would increase in the coming days.
Banking sources said that the non-performing loans (NPLs) have increased sharply in the last six months. “Increase in NPLs means that default rate is increasing in the country,” an official of a local bank commented.
http://www.dailytimes.com.pk/default.asp?page=2008%5C08%5C15%5Cstory_15-8-2008_pg5_14