Banks can charge you more for late credit card payments, Supreme Court rules

By
Ziraat Times
-

New Delhi: The Supreme Court on December 20 overruled National Consumer Dispute Redressal Commission’s (NCDRC) 2008 ruling that barred commercial banks from charging credit card holders over 30% per annum for late payments. This decision affects how banks can charge interest on credit cards. Let’s break down what happened and why it matters.

 

What Was the Original Rule?
Back in 2008, the National Consumer Disputes Redressal Commission (NCDRC) ruled that banks couldn’t charge credit card holders more than 30% interest per year on late payments. This was meant to protect consumers from being hit with sky-high interest rates.
For instance, if you missed a payment or only paid part of your credit card bill, the most the bank could charge you in interest was 30% per annum.
The national consumer court had in 2008 restrained banks from charging interest rates in excess of 30% per annum from the credit card holders for their failure to make full payments on due date.
On December 20, 2024, the Supreme Court overturned that 2008 decision. This means that banks can now charge interest rates higher than 30% on late payments. A bench of Justices Bela Trivedi and Satish Chandra Sharma was hearing petitions by banks such as Standard Chartered Bank, Citibank, American Express, and Hong Kong and Shanghai Banking Corporation (HSBC), which questioned before the court whether the NCDRC had jurisdiction to fix a maximum ceiling on interest rates to be charged by the lenders from their credit-card holders for their failure to make payment on the due date.

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