Credit Card Users Face Steep Interest Rates After Supreme Court Verdict
After the Supreme Court's decision, experts believe that the ruling provides significant relief to banks and will encourage credit card users to pay their bills on time.
New Delhi: A major development has emerged for credit card users. The Supreme Court has granted banks the authority to impose hefty interest rates on users who delay payment of their credit card bills. In a landmark decision, the court allowed banks to set their own interest rates for users who fail to pay their bills on time.
The Supreme Court dismissed the ruling of the National Consumer Disputes Redressal Commission (NCDRC), which had set a cap on the interest rate for credit card bills. As a result, after this ruling, banks can now charge higher interest rates for delayed payments. In 2008, the NCDRC ruled that banks could not charge more than 30% annual interest on credit card bills. However, the Supreme Court bench, consisting of Justice Bela Trivedi and Justice Satish Chandra Sharma, overturned this decision.
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This case involved major international banks like Standard Chartered, Citibank, American Express, and HSBC, which had appealed to the Supreme Court against NCDRC’s decision. The court ruled that there should be no restrictions on the interest rate for delayed credit card payments, allowing banks to charge interest at their discretion.
The Awaz Foundation had earlier filed a complaint with NCDRC, alleging that some banks were charging excessive interest rates on credit card bills. In response, NCDRC had imposed a 30% cap on the interest rate, which the banks challenged in the Supreme Court.
Banks argued that they did not charge interest for up to 45 days on credit card transactions, but delays in payment by some users led to significant financial losses for them. The Reserve Bank of India (RBI) had also expressed concern over the increasing number of credit card bills and had called for stricter control over the issuance of credit cards.
After the Supreme Court’s decision, experts believe that the ruling provides significant relief to banks and will encourage credit card users to pay their bills on time.
