The Bank of Thailand will keep the minimum monthly payment rate on credit cards at 8% for another year, to the end of 2025, to help reduce the burden of debt repayment, especially for vulnerable groups.
The minimum payment was earlier scheduled to return to the normal rate of 10% of the outstanding balance in January 2025, the central bank said.
The 10% minimum was originally reduced to 5% during the Covid-19 pandemic in order to help the many people who were in financial difficulty at the time. It was subsequently raised to 8% at the start of this year.
The change was among measures approved by central bank’s Financial Institutions Policy Committee, which “saw that there are still vulnerable debtors who need additional assistance because their income has not fully recovered”, deputy governor Ronadol Numnonda said in a statement.
Cardholders who meet minimum payment obligations will get a cash-back equivalent of up to 0.5% of interest on the outstanding balance to encourage them to close the debt faster, the central bank said.
Debtors unable to meet the minimum repayment can seek to restructure their obligations to term loans to be paid back in instalments, it said.
The latest move falls short of Finance Minister Pichai Chunhavajira’s demand that the minimum credit card payment be reduced to 5% again.
Household debt in Thailand has soared to 16.37 trillion baht, or 90.8% of gross domestic product, from less than 14 trillion in 2019, as the economy struggles to shake off the impact of the Covid pandemic.
Bank of Thailand Governor Sethaput Suthiwartnarueput has previously described high household debt as “a chronic disease” that won’t go away anytime soon.
High household debt has been seen as one reason behind the central bank’s reluctance to reduce interest rates from a decade-high 2.5%, despite repeated pleas from politicians including Prime Minister Srettha Thavisin.
The central bank also said it would continue to promote consolidation of home and retail debt by relaxing loan-to-value (LTV) ratio norms to reduce the overall burden and bring down the interest rate.
The Bank of Thailand said it would closely monitor the effectiveness of the new measures and is ready to adjust them according to the situation, if needed.