HDFC Bank has increased the late payment fees and interest rates on revolving balances across its credit card portfolio, Bloomberg has reported.
According to the report, this move by India’s largest lender and issuer of credit cards could lead to others following suit.
The report states that the late payment fees for credit cards other than Infinia range has been raised by Rs 150-350, with effect from September 1. According to the statement of charges and fees on HDFC Bank’s website, the bank was charging a flat fee of Rs 950 on late payment by customers with an overdue balance of Rs 25,000 and above till August 31.
Moneycontrol could not independently verify the report.
From September 1, however, those with a credit card balance between Rs 25,000 and 50,000 will have to shell out Rs 1,100 on late repayments. Those having a balance more than Rs 50,000 will pay Rs 1,300, the report suggests.
The bank has also raised interest rate on ‘revolver balances’ on some credit cards from 3.49 percent monthly to 3.6 percent monthly, Bloomberg reported.
According to Macquarie Research, late payment fees form an average 22 percent of any card issuer’s total fee income, not to mention 30 percent of the operating profit. The research house said that, on an average, 15-20 percent card-carrying customers are in default for up to 30 days.
“Once moratoriums end, card issuers will resume charging late payment fees. It is easier to convince customers who have a small amount overdue to pay up by reminding them of disincentives for missing payments – large upfront penalties over and above the 3-4% monthly interest rates,” Macquarie said, according to the report.
Earlier, HDFC said that the number of customers preferring to buy high-value products through installments stood at an “all-time high” during the coronavirus pandemic.