Credit card defaults could hurt you badly now

With SC rejecting 30% cap on credit card interest rates, card issuers will now have more flexibility to set rates

- BENN KOCHUVEEDAN @Mumbai

IN a big relief for credit card issuers who are facing a rising tide of bad loans since the past few quarters (delinquencies are at nearing double-digit mark now; in June 2024 quarter it soared by 110 bps to 7.6%), the Supreme Court, over the weekend, has given them a free hand to set interest rates for late payments, defaults and even on the outstanding dues.

Not that their hands were tied till now--in a strict legal sense they were, but not in practice as even when the matter was subjudice since February 2009, card issuers were regularly increasing their interest rates which now vary from a low of 45% (3.8% per month) to a high of 55% annually or 4.5% per month on certain cards.