Credit card users thought they would benefit greatly from Bangladesh Bank's order not to charge compound interest on bills payable till the end of this month, but that was not the case.
After the circular issued on April 15, many users stopped paying their credit card bills as they thought their interest would be waived. However, they woke up to calls from their banks for payments to avoid a hefty interest burden of 24 percent to 30 percent per year – regardless of the impact of the Covid-19 pandemic on them.
"We get queries from clients every day about the issue. We struggle to explain to them that they are not waived from interest payments on their credit card bills," said the head of card division of a leading private bank.
A customer was taken by surprise when he saw that he had to pay Tk500 as interest against Tk25,000 bills for a two-week delay. However, he was waived Tk10 of compound interest.
Another customer has Tk50,000 due for March. He has to pay an additional Tk1,000 in interest after the billing cycle expires in April. This is called simple interest.
If there is applicable compound interest, the total payable bill will stand at Tk51,020 unless no more transactions occur.
According to bankers, the central bank took the decision without consulting the banks. Moreover, the banking regulation and policy department of the central bank issued the circular – instead of the payments systems department, which knows how banks operate credit card business.
"We know the suffering of the people during this critical time. We could have waived interest by 50 percent if Bangladesh Bank had consulted with us," said a top official of a private bank.
He, however, hailed the central bank for waiving customers from paying late payment fees that vary from Tk500 to Tk700 plus value added tax. The central bank had earlier asked banks not to charge late payment fees on credit cards until May 31.
Ayub Ali, a private service holder, said, "I have three credit cards. Sometimes I have to pay one credit card's bill with another card. Now I have to go to bank branches to clear cheques to withdraw money to ease the extra payment burden."
On Monday, an associate professor of Dhaka University received a phone call from a private bank asking him to pay the dues of his credit card. The cardholder asked the bank official about the instructions of the central bank not to impose a late payment fee or compound interest until May 31.
The bank official argued with the cardholder and forced him to pay the bill via mobile banking. The cardholder complained to the bank about the matter and then the bank official apologized for his misdeed.
The academic told The Business Standard, "The bank has violated the instruction of Bangladesh Bank while the country is facing a global pandemic of the novel coronavirus."
"How will people get to the banks? And why will people go to the bank and risk contracting the novel coronavirus from the gathered people?," he added.
The Business Standard talked to the bank's managing director who said, "It was just a reminder for customers that they have delayed payments, nothing else."
Fuad Hassan, another cardholder, said he had received five text messages from a foreign bank asking him to pay his bills within a very short time after the billing cycle was over.
To delay paying his credit card bill, he has to pay more because the bank has charged interest.
"I have to pay more money for failing to understand the central bank's instruction on waiving the compound interest charge," said Fuad.
According to the central bank data, as of January, 59 banks have issued 15.56 lakh credit cards and the transactions in January stand at Tk1,357 crore.