Many customers also have to close the card after a period of use by being "shocked" by the policy of calculating interest on the deferred payment.
Credit cards attract users because it has many incentives, but many customers also have to close the card after a period of use by being "shocked" by the policy of calculating interest on the deferred payment.
With the rapid development of the current payment system, credit cards are considered a strategic product of each bank and also attract customers thanks to its convenience, security, and many incentives.
One of the advantage of credit cards is that the cardholders could spend the money first and pay for it later; the interest free period of banks usually ranges from 45 to 55 days. This helps customers be more active in spending, to meet their financial needs more easily.
In addition, the attractive incentives that cardholders enjoy are also a big plus of credit cards. Banks are trying to compete with each other by linking with brands to offer refunds, installment sales programs with 0% interest rate to customers. And the cardholder is also one of the beneficiaries in this race.
It can be seen that owning a credit card offers many advantages for cardholders compared to owning a normal debit card. This has led to a rapid increase in demand for credit cards in recent years. However, many customers have to cancel credit cards after a period of use. The main reason is that after the interest-free period, customers are "shocked" because the interest rate on the deferred payment is quite high.
According to the survey of Tri Thuc Tre, as of September 11, 2019, for standard Visa credit cards, groups of state-owned commercial banks such as BIDV, Vietinbank or Agribank has the lowest applicable interest rates of less than 20% / year
In some foreign banks there are significant differences. If at Shinhanbank, the interest is 26% / year for the late payment, then HSBC or Citibank Vietnam will apply the interest rate at a high level compared to the whole system, over 30% / year.
For other commercial banks, cardholders' interest rates are subject to a range of 23-29% / year depending on a number of bank policies. As with NCB's standard Visa card, if collaterals are available then cardholders are only subjected to an interest rate of 23%, otherwise the interest rate is 25%.Or in Techcombank, the interest rate applicable to ordinary customers is 29.8% and 26.8% for customers who are priority bank members (VIP customers).
Not only is the interest calculated, but after the number of days of interest exemption, the unpaid amount or the minimum amount payable, the customer is also subject to a late payment penalty. Each bank will charge a penalty fee on the minimum remaining amount or on the total amount of late payment.
Banks including MBBank, SCB, ABBank, ACB and HSBC collect fees at the remaining 4% of the minimum loan balance, while at Vietinbank it is 3% -6%. Regarding the fine on the total unpaid amount, VietABank ranks first with the lowest fee of only 1%. The highest fee up to 6% applies for standard Visa credit cards at Sacombank and Techcombank. The remaining 7 banks have fees ranging from 3% to 4.4% of outstanding loans, including Agribank, BIDV, NCB, HDBank, Shinhan Bank, Citibank Vietnam and TP Bank. In addition, banks also stipulate the minimum fine from VND 50,000 to VND 300,000, even at Citibank the maximum fine of up to VND 2 million.
Thus, with a standard Visa credit card, the interest rate of late payment penalties of state-owned banks is much lower than that of other commercial banks, some foreign banks also collect high interest rates in excess of 30% / year. However, if the cardholder knows how to spend and pay the debt during the interest free period, the interest rate is not so important but instead is the card service as well as the utilities and incentives that the card brings. Using a credit card effectively is when the customer is not subject to interest rates, late payment penalties, and maximizes the promotion offered from the card.