Credit Card Interest Rate Verdict:
The National Consumer Disputes Redressal Commission (NCDRC), during a hearing on July 7, 2008, had banned banks from charging interest rates between 36% and 50% on credit card dues, setting a maximum limit of 30%. However, on December 20, a Supreme Court bench comprising Justice Bela Triveda and Justice Satish Chandra Sharma quashed the NCDRC’s decision. With this ruling, banks can now set their own credit card interest rates as per applicable rules.
In this case, HSBC and other banks challenged the NCDRC’s decision in the Supreme Court, arguing that the Consumer Commission lacked the authority to regulate bank operations. The banks contended that the Commission’s decision would adversely impact them. In 2009, the Supreme Court had stayed the NCDRC’s decision, and now it has been permanently overturned.
Consumer Commission’s Statement:
The NCDRC, in its 2008 decision, criticized the Reserve Bank of India (RBI) for failing to regulate high credit card interest rates ranging from 36% to 50%. It emphasized that in a welfare state, financial institutions should not exploit consumers’ financial vulnerabilities. The ruling was made in response to a petition filed by the NGO Awaaz Foundation.
The Commission had also stated that banks use aggressive marketing strategies to encourage credit card usage. Consequently, customers who fail to meet repayment terms incur exorbitant interest charges, constituting an unfair trade practice.
Interest on Credit Cards Abroad:
During the case, the NCDRC compared credit card interest rates in countries like the US, the UK, and Australia. It noted that interest rates in the US and UK range from 9.99% to 17.99%, while in Australia, they range from 18% to 24%.
