BANGKOK, May 25 – The Finance Ministry’s plan to refinance credit card debt will not adversely impact the overall credit card business because the loan amount set aside to support the project totals only Bt10 billion, according to an industry executive.
Krungthai Card (KTC) Chief Executive Officer Niwatt Chittalarn said the amount is rather small when compared with revolving spending at about Bt190 billion annually in the credit card business.
As a major credit card service provider, KTC is concerned about the planned refinancing of credit card debt by state-owned banks, Mr Niwatt said.
Many credit card clients, he said, are poised to participate in the project but would reconsider their decision because those refinancing their debt are required to have their cards repossessed.
With this condition, some clients who need to use credit cards might decide not to join the project.
As for the interest charge for the refinanced debt at 10 per cent against an average of 20 per cent charged by credit card entrepreneurs, he said KTC is not in a position to reduce its interest rate to equal that offered by the project because the company had risk-taking costs for services to clients.
An adjustable interest charge offered to credit card debtors abroad should be adopted rather than the proposed refinancing.
Interest charges on credit card debt overseas depends on the payment record of each client, he said. Clients having good records would be offered a lower interest rate.
Such an approach would encourage credit cardholders to use discipline in spending, he said, adding that it would benefit the overall economy.
