Gov`t Considers Reducing Interest Rates on Delayed Payments to Credit Card

The government decided to explore the viability of lowering the high interest rates on delayed payments to credit card companies and various fees. The government intends to revise the enforcement of the non-bank financing enforcement ordinance within this year.

Deputy Prime Minister Jin Nyum said at a meeting of senior officials of the Ministry of Finance and Economy yesterday that ``there are complaints that credit card companies are collecting high interest rates on the payments, although other interest rates are coming down.`` He instructed senior officials to examine ``whether it is possible to lower the interest rates on delayed payments to the credit card companies.``

Following the instruction, the Ministry of Finance and Economy decided to find ways to lower interest rates on delayed payments, which are currently 24.5 percent to 29 percent, interest rates on cash service fee, which are currently 11 percent to 29 percent according to the credit level, interest rates on card loan service fee, which are currently 8.5 percent to 23 percent according to the loan period, and interest rates on installment fee, which are 9.9 percent to 19 percent according to the installment period. The Ministry also decided to consider ways to strengthen the competition by activating the card business for the long run.

Choi Kyoo-Yeon, director of the insurance system of the Ministry of Finance and Economy, said, ``It is difficult for customers to compare the interest rate system of the card companies because there are differences according to the credit level and the loan period. The Ministry plans to revise the non-bank financing enforcement ordinance or enforcement regulations within this year to help customers easily compare the interest rates of various fees by improving the public notice system.

Park Joong-Hyun sanjuck@donga.com