From June 1 banks will be obligated to reduce credit card interest rates to 2.25 percent per month and 26.95 percent per year under a new rule from Bank Indonesia, the country’s central bank.
The upper limit for credit card interest currently stands at 2.95 percent per month, reaching 35.4 percent annually, in accordance with a Bank Indonesia regulation issued in December.
According to data provided by the central bank, 17.6 million credit cards have been issued in Indonesia as of March. The data shows 80.6 million transactions have been made, equalling Rp.71.8 trillion (US$5.4 billion).
Some banks have already begun marketing campaigns, including PT Bank Mega.
“We informed our credit card holders via various channels, such as billing, statements and on the website since April 1,” Dodit Wiweko, Bank Mega’s Card and Personal Director, said.
CIMB Niaga is also readying to comply with the new rules and spotting the benefits.
“We hope that the reduction of the credit card interest rate limit leads to an escalation in retail transactions,” Consumer Director Lani Darmawan said.
Mohamad Helmi, General Manager at Bank Rakyat Indonesia, said the bank has found monthly billing statements are the most effective way to introduce the rates to customers as the statements are read carefully.
There are 22 banks and two multi-finance institutions issuing credit cards in Indonesia: Mandiri,BRI, BNI, BNI Syariah, BCA, Danamon, Bukopin, Bank Mega, Panin Bank, Permata Bank, Citibank, Bank ANZ Indonesia, MNC Bank, CIMB Niaga, ICBC Indonesia, Maybank Indonesia, HSBC, OCBC NISP, Standard Chartered, Bank UOB Indonesia, Bank Sinarmas, Bank QNB Kesawan, AEON Credit Services and Shinhan Ino Finance.
Image credits: Kompas