Private banks have begun hiking the credit card interest rates. Else known as finance charge, interest is paid by holders of credit cards, in case they do not pay the amount that is outstanding within the speculated timeframe which is given to them that is free from interest.
As per a statement made by various bankers, the rate of interest on credit cards is kept high due the growing problems of delinquency. The rate amendment wasn't reliant on banks' cost of funds, yet on the danger recognition, they included. By and large, There is no material effect due to hike in the fund cost even after increasing the rates of credit cards by 100-BPS.
The investment rates on Visas rely on upon danger recognition. Given the dubious nature's domain, the danger of default has expanded. This aroused a few banks to build their rates," said a senior broker responsible for the retail managing an account business at a foreign bank