Previously, a customer named P.H.A opened a Master Card at Eximbank’s Quang Ninh branch on March 23, 2013, with a credit limit of 10 million dong. This credit card had 2 transactions totaling 8.5 million dong, but the customer had not made any payments.
Starting from September 14, 2013, the above-mentioned card debt turned into bad debt, with a overdue time of nearly 11 years as of the notification date. According to the bank’s announcement, the total amount that the cardholder has to repay, including principal and estimated interest until October 31, 2023, is over 8.8 billion dong, of which the interest debt is over 8.8 billion dong, and 8.5 million dong is the principal debt.
Therefore, after 11 years of non-payment of the outstanding debt, the total amount of both principal and interest that this customer has to repay is thousands of times higher. This information has caused public debate, as many people believe that the interest charged to the customer is excessively high.
According to Mr. Dinh The Hien, an economic expert, when the bank announces the principal and interest amount, many people are shocked and think: This is neck-cutting interest equivalent to loan shark rates.
However, this expert believes that the activities of banks are based on specific grounds and regulations.
In the case of a 11 million dong credit card debt, with an interest rate of 33% per year, the total amount of both principal and interest, when added together, is roughly over 8 billion dong, which is correct.
Mr. Hien emphasized that a credit card interest rate of 33% per year is not considered “usury interest” but is equivalent to the highest interest rate for consumer loans.
Mr. Hien further stated that banks have clear regulations on foreign exchange business contracts, based on the agreement of both parties. Meanwhile, for loans from loan sharks, the lending operations are often based on exploiting customers’ lack of knowledge and taking advantage of them. High-interest lenders often target the recovery of the borrower’s home and threaten their relatives and loved ones.
He also gave a similar example: If a customer has 15 million dong debt in a credit card and forgets to repay it, after 3 years, with an interest rate of 33% per year, the debt will amount to 187 million dong. This amount can still be managed. However, if left for 10 years, the debt amount will reach 75 billion dong. When mentioning the debt amount of 75 billion dong, many people will be “shocked” because that is a huge amount of money.
Mr. Dinh The Hien presents a calculation in the case of a customer having 15 million dong debt in a credit card.
Therefore, experts advise that credit card users carefully review the amount of outstanding debt, make timely payments, and prevent the situation where the principal and interest increase, becoming a burden.
