The Bank of Thailand (BoT) affirms up to 80% of credit cardholders can repay their debt at the minimum payment rate of 10%, while the regulator prepares assistance measure to help consumers who cannot comply with the rule.
The BoT assessed there is a small number of credit cardholders unlikely to comply with the minimum card payment rules once they return to regular rates.
Roughly 70-80% of credit cardholders are able to repay debt at a minimum payment rate of 10% of the balance per month, said the central bank's assistant governor for supervision Suwannee Jatsadasak.
At present, the central bank allows credit cardholders to repay debt at a minimum rate of 5% of the balance per month under its debt assistance measures to help consumers cope with the impact of the pandemic. The rate is scheduled to rise to 8% in 2024, before returning to the regular rate of 10% in 2025.
According to the central bank's data, the regulator will set a specific timeline for the increase of its minimum payment rate for credit card loans. The central bank is prepared to discuss the issue with credit card issuers.
The regulator has prepared assistance measures to help credit cardholders who cannot comply with the regulation.
The BoT allows credit cardholders who are unable to repay debt at the minimum rate of 8% next year to switch to credit card loans with a ceiling interest rate of 16% per year.
"Previously the central bank planned to increase the minimum payment for credit cards to 8% this year, but delayed the hike to next year, in line with economic circumstances," she said.
Ms Suwannee said the BoT would encourage credit card service providers to inform and seek understanding with cardholders about the increase in the minimum payment rate.
The central bank has no plan to increase the maximum interest rate for credit card loans as a higher rate would dampen the debt repayment ability of consumers amid an uneven economy recovery, she said.
Before the Covid-19 pandemic, the ceiling interest rate for credit cards was 18%, while the minimum payment rate was 10%.
In related news, the BoT announced the banking system's loan growth declined by 0.4% in the second quarter year-on-year.
The contraction was the first in a few years, primarily attributed to loan repayment from government and large corporations.
Some large corporations have shifted to raising funds via corporate bond issuance rather than through bank loans to contain funding costs amid rising interest rates.