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Central bank cuts credit card loan rate to 18% from 20%

The Bank of Thailand on Wednesday announced a cut of credit card interest rate from a maximum of 20 percent to 18 percent and tightening control on credit card and unsecured personal loans effective as of September 1.

The reduction of interest rate on credit card loans and the tightening control on credit card and personal loans are part of new rules issued by the central bank in wake of high household debts and economic uncertainty.

Under the new rules, central deputy governor Mrs Ruchukorn Siriyothin said that credit card holders who earn 30,000 baht a month will have credit line of not exceeding 1.5 times of their income for each financial institution instead of five times of their income as it is now. They can take out loans from a maximum of three financial institutions.

For credit card holders who earn not more than 50,000 baht a month, they will have credit line of three times of their income per each financial institution and a credit line of five times of their income if their income is 50,000 baht. There is no limit to the number of financial institutions they can ask for credit line.

Mrs Ruchukorn said that the new rules would slight impact on credit expansion. She added that the rules were designed to maintain a balance of consumers' ability in earning income and in debt settlement so that their debt will not turn into non-performing loans.

Source: Thai Public Broadcasting Service (Thai PBS)

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