2017, Credit Card Interest Rates Will Fall

Bank Indonesia confirms that credit card interest rates will be lowered starting June 2017. The current upper limit (capping) for credit card interest rates is 2.95 percent per month or 35.4 percent per year. Starting June 2017, the upper limit for credit card interest rates will be lowered to 2.25 percent per month or 26.95 percent per year. This news is certainly encouraging for consumers, as they have been charged relatively high interest rates by credit card issuers, up to 35 percent per year.

The reduction in the upper limit of credit card interest rates aims to revitalize the credit card business, which has been stagnant throughout 2016. The slowing domestic economy has also reduced consumer purchasing power, resulting in little change in credit card transaction values from the previous year.

Credit card transaction value from January to October 2016 reached Rp 230.9 trillion, stagnant compared to the same period the previous year. Transaction volume from January to October 2016 only grew by 7.5 percent to 248 million transactions compared to the same period in 2015. Similarly, the number of credit cards in circulation until October 2016 only grew by 2.9 percent to 17.2 million units.