Banks in Vietnam charge credit card interest rates up to 28.8%, boost service
As deposit interest rates heated, banks in Vietnam also started to adjust the lending rates charged for credit card using loans up to 28.8%, the local newswire VnExpress reported April 19
High interest rates
The highest credit card loan rates was seen at foreign owned ANZ bank in a range of 1.15-2.4% per month or 25.8-28.8% p.a. applicable from January 17.
Other foreign bank, HSBC offer softer rates at 24% p.a.
Some local banks have adjusted up the rates including Techcombank raising rates by 1% to 24% p.a.; Dong A Bank raised the lending rates to over 2% a month from previous 1.9%; ACB bank raised the rates to 23% p.a. in mid March.
Among the big four, BIDV offered the rate at 18% p.a. while Vietcombank has softest rate at 17.5% p.a., the same rates charged for private and business loans.
According to the data from the State Bank of Vietnam (SBV), the lending rates were mostly at 16-18% p.a. for business and production sector and 20-22%p.a. for non-production loans in early April.
Luu Trung Thai, deputy general director of the Military Commercial Joint Stock Bank (MB) said “high” or “low” lending rates depend on the banks’ fee policy, but it is not profitable for banks to provide credit card loans under 20% p.a. interest rate amid current deposit rates of around 14% p.a. and higher management and operation costs, customers’ care and initial investments.
Boost Credit Card Services
Seeing opportunity to develop credit card services, banks are boosting credit card use through various promotion including free card issue, free first year annual fees (mostly at VND200,000-VND500,000 p.a.), score accumulation for users and cooperation with shops for other promotion programs.
A bank manager said the credit card promotion is a proactive move ahead of summer holiday and spending season, especially for those who travel abroad amid Vietnam’s tight dollar outflow control policy. He also pointed out the credit card is a solution for banks amid tightening credit growth, banks depend more on service fees.
Thai shared the same view, citing that credit card business has room to develop as less than 10% of 30 million cards issued are credit ones. “Profit margin of credit card is certainly higher than common ATM ones which banks have invested recently much without profit” Thai added.
He also shared that MB is going to launch first credit card product with an expectation of having at least 10,000 users out of half a million accounts at the banks. – Stoxplus.com
Tags: credit card interest rates