Maximum interest rate on credit cards by 25 percent ,Bangladesh Bank has increased the interest rate on credit cards by a little more. As a result, no bank will be able to charge more than 25 percent interest on credit cards from the new year. Earlier, it was 20 percent. And interest on credit cards will start charging after the specified repayment period.

On Sunday (December 1), the Banking Regulations and Policies Department of Bangladesh Bank issued a notification in this regard. The new directive on credit cards will be effective from the first day of the new year (January 1).

In the new directive, the central bank said that there is a directive to set a maximum interest rate on credit cards at 20 percent to ensure reasonable interest rates and protect customer interests, including providing loan facilities against the credit card limit. However, to ensure sound credit risk management and to keep it consistent with the policy interest rate and the increasing funding costs of banks, the maximum interest rate on credit cards has been set at 25 percent.

The central bank also said that the interest rate of credit cards will be determined within this range, subject to the credit demand of the banks and the availability of loanable funds.

The Bangladesh Bank directive also states that Islamic Sharia-compliant banks will take necessary measures to determine the rate of profit for their investments, following the aforementioned directives. Other directives will remain unchanged. This directive has been given under the powers conferred by Sections 29(2)(c) and 45 of the Bank Companies Act, 1991, which will come into effect from January 1.

Currently, banks in the country allow loans to be repaid for up to 45 days. Cash withdrawals of more than 50 percent against the credit limit on credit cards cannot be made. Credit card statements are generated on a specific day of the month. The statement of that card is generated on the date on which the card is allotted. Once a statement is generated, there is an interest-free period of about 50 days, including additional days, depending on the bank, until the next statement is generated. And if the bill is settled on the additional day, no interest is charged.

However, this interest free period does not apply when withdrawing cash from an ATM.