Trump’s proposed max 10% interest on credit cards; how does India fare?
Credit card interest rates in India can go up to 53 percent, though some banks offer products with lower rates. But they are not easy to lay one's hands on.
During his 2024 presidential campaign in New York in September 2024, US President-elect Donald Trump had proposed a 10 percent cap on credit card interest rates, and added ``We can’t let credit card companies charge annual interest rates of 25 to 30 percent.’’ Trump's proposal aims to provide relief to consumers struggling with card debt, which has surpassed $1 trillion in the United States.
2/14
In India, select banks offer credit cards that charge relatively lower interest rates compared to others. Unlike conventional credit cards with monthly interest rates of 3-3.5 percent, these cards charge as little as 0.75-2 percent per month. Such cards are targeted at individuals who find it difficult to clear their bills by the due date every month. While paying in full is always the best option, these cards offer a more affordable alternative for managing monthly balances. Here are cards with low interest rates as compiled by credit card comparison website CardInsider.
3/14
Interest rates charged by IDFC First Bank on its credit cards such as IDFC First Wealth, IDFC First Select, IDFC First Classic, and IDFC First Millennia range from 0.75 percent per month (9 percent per annum) and go up to 2.99 percent per month (36 percent per annum). The bank looks at the credit score, annual income, employment status, existing debt, and repayment history of the card applicant while determining the interest rate, which can vary from person to person. There are no joining and renewal fees for these cards.
4/14
Axis Bank charges 1.5 percent per month (19.56 percent per annum) on its Burgundy Private Credit Card. The joining / renewal fee for this is Rs 50,000 plus GST. However, there are no such fees for Burgundy Private Savings Account holders.
IndusInd Bank charges 1.79 percent per month (21.48 percent per annum) on its Indulge credit card. The joining fee is Rs 2 lakh plus GST, and the renewal fee is Rs 10,000, plus GST. The bank waives the renewal fee on spends of Rs 10 lakh or more in the preceding year.
6/14
HDFC Bank charges 1.99 percent interest per month (23.88 percent per annum) on its Infinia, Infinia Metal, Diners Black Metal, Diners Black, BizBlack Metal, and H.O.G Diners Club credit cards. The joining / renewal fee for the Diners Black Metal card is Rs 10,000 plus GST, and for Infinia Metal it’s Rs 12,500, plus GST.
7/14
Low-interest rate credit cards are offered to select applicants with strong financial profiles. Typically, only high net-worth individuals (HNIs) or those with excellent credit scores qualify for these cards. Banks reserve these offers for low-risk borrowers, ensuring minimum default. To become eligible, applicants must maintain a stellar credit history, promptly pay dues, and demonstrate responsible financial habits. By doing so, over time, you can increase your chances of securing a low-interest credit card.
8/14
While choosing low-interest cards, ascertain whether you will have to forgo perks like bonus reward points, cashback, and exclusive deals that regular cards typically offer. Also, keep an eye on joining and annual fees, which are likely to be higher, barring some exceptions. Assess your needs before picking up a card.
On the other hand, several credit cards charge much higher interest rates when you carry forward balances, often above 3.5 percent per month (42 percent per annum). Here are some cards with high interest rates, as compiled from Paisabazaar.com and bank websites.
10/14
Axis Bank charges 4.4 percent per month (52.86 percent per annum) on its Ace, and Flipkart card. The joining / renewal fee for Ace is Rs 499, plus GST. The renewal fee is waived on spends of Rs 2 lakh or more in the preceding year. The joining and renewal fee for the co-branded Flipkart card is Rs 500 plus GST, but the renewal fee is waived on spending of Rs 3.5 lakh or more in the preceding year.
11/14
HDFC Bank charges 3.75 percent per month (45 percent per annum) on the Regalia Gold and Millennia cards. The joining and renewal fee for Regalia Gold is Rs 2,500, plus GST. The latter is waived on spending Rs 4 lakh or more in the preceding year. For Millennia, the joining and renewal fee is Rs 1,000 plus GST. The renewal charges are waived if the card user has spent over Rs 1 lakh in the preceding year.
12/14
ICICI Bank charges 3.5 to 3.8 percent per month (42 to 45.6 percent per annum) on the Amazon Pay card. According to the bank, the interest rate will vary dynamically from 3.5 to 3.8 percent per month based on the customer’s credit behaviour and performance. This has no joining and renewal fees.
13/14
On Cashback SBI Card the interest rate is 3.5 percent per month (42 percent per annum). The joining and renewal fee is Rs 999 plus GST. The renewal fee is waived on spending Rs 2 lakh or more the preceding year.
14/14
Therefore, use your credit cards responsibly. Use a credit card as a spending, rather than a credit tool. Even low-interest credit cards are expensive compared to secured or personal loans. Have a disciplined approach to borrowing. Since credit cards offer a significant interest-free period, there may be a tendency to over-spend while shopping, travelling, dining, and so on. If you spend more than you can afford and cannot pay your card bill on time, you will incur interest charges along with late payment fees, which could lead to a debt trap.
Hiral Thanawala is a personal finance journalist with over 10 years of reporting experience. Based in Mumbai, he covers financial planning, banking and fintech segments from personal finance team for Moneycontrol.
