Though currently interest rates on loans have reached a record low in Sri Lanka it is no secret that some banks charge unreasonably huge interests on Credit Cards.

A survey by adaderanabiz.lk revealed that some banks still charge as much as 24 per cent as interest on the credit cards issued to their customers.

Cannot the interests on credit cards be reduced further?

The interest rates on credit cards cannot be lowered to match the housing loans. This is since if needed the card holder could use the credit card for any transaction without any interest for 45 days.

There is no interest applicable if the amount is repaid without any issues within 45 days. Hence, the banks face a higher turnover from credit cards.

Due to this, in any country the interest rates charged on credit cards are higher than housing or other loans.

However, with the current low interest rates prevailing in Sri Lanka, some banks charging as high as 24 per cent on credit cards is unreasonable.

While speaking to adaderanabiz.lk, an economic analyst said the with the interest rate on housing loans at 11 per cent, the banks could charge around 16 per cent on credit cards.

He said he believes that since several banks are providing credit cards at 16 per cent interest the banks which continue to charge higher rates would be forced to reduce their charges in the near future.

Or else, the credit card business of these banks could suffer, he added further.

While the Central Bank of Sri Lanka has lowered its policy interest rates and in turn lowered Sri Lanka’s interest rates, it has stated that the Sri Lankan banks could further reduce their interest rates.