Credit Card Interest Rates
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The credit card industry in India has witnessed a boom over the last one decade. With a population that is mostly in its mid 20's and higher disposable incomes the credit card industry in India is a significant contributor to the robust growth of the India economy. According to a study conducted by Business Standard there were about 27 million cardholders in India in the year 2009.
The credit card market in India is dominated by ICICI bank. This bank accounts for almost one third of the total credit cards issued in the country. ICICI Bank is closely followed by Citibank and HSBC, which are said to be the second and third most popular credit card offering banks.
One of the biggest factors that are to be kept in mind before deciding on a particular credit card is the interest rate charged by the bank or the credit card issuing company. The interest rate charged on a particular credit card generally varies from one bank to the other. But since the interest earned from credit cards is a major source of revenue for the banks the interest rates range from 1.99% to 3% per ,month.
Factors Determining Credit Card Interest Rates in India
Repo rate: One of the most important factors that determine the interest rate of a particular credit card is Repo rate. A repo rate is the rate at which the RBI of India lends money to the commercial banks of the country. The rising and decreasing of interest rates offered by the banks is directly proportional to this rate.
Reverse repo rate: The Reverse repo rate is the rate at which the Reserve Bank of India borrows money from commercial banks. Consequently if this rate is high, the banks get more funds and hence lower their interest rates on credit cards.
Prime Lending Rate (PLR): It is according to the Prime Lending Rate that the various banks fix the interest rates of various loan products.
Factors to be kept in mind before accepting a credit card
Joining fees: Most of the credit cards these days come free that is there is no joining fee attached to it.
Annual Fees: Most of the banks offer free credit cards but with an annual fee attached to it. This fee is supposed to be paid from the second year onwards.
Interest Rate: The most important factor before accepting a credit card is the rate of interest attached to it. Most of the banks nowadays are offering free credit cards with minimum or zero interest rates.
Last Updated on 12/05/2011
One of the biggest factors that are to be kept in mind before deciding on a particular credit card is the interest rate charged by the bank or the credit card issuing company. The interest rate charged on a particular credit card generally varies from one bank to the other. But since the interest earned from credit cards is a major source of revenue for the banks the interest rates range from 1.99% to 3% per ,month.
Factors Determining Credit Card Interest Rates in India
Repo rate: One of the most important factors that determine the interest rate of a particular credit card is Repo rate. A repo rate is the rate at which the RBI of India lends money to the commercial banks of the country. The rising and decreasing of interest rates offered by the banks is directly proportional to this rate.
Reverse repo rate: The Reverse repo rate is the rate at which the Reserve Bank of India borrows money from commercial banks. Consequently if this rate is high, the banks get more funds and hence lower their interest rates on credit cards.
Prime Lending Rate (PLR): It is according to the Prime Lending Rate that the various banks fix the interest rates of various loan products.
Factors to be kept in mind before accepting a credit card
Joining fees: Most of the credit cards these days come free that is there is no joining fee attached to it.
Annual Fees: Most of the banks offer free credit cards but with an annual fee attached to it. This fee is supposed to be paid from the second year onwards.
Interest Rate: The most important factor before accepting a credit card is the rate of interest attached to it. Most of the banks nowadays are offering free credit cards with minimum or zero interest rates.
Last Updated on 12/05/2011
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