Do shoppers know the interests charged on credit card?
63% of unaware about the interest rate charged according to Sparkwinn Survey
People are increasingly using their credit cards regularly to shop at supermarkets, restaurants, clothing outlets etc. A definite increase in spending through cards is noted in high-end pockets of Colombo and suburban areas, as consumers are actively on the lookout for alternative payment methods. Almost 41% of the card users surveyed by Sparkwinn Research stated credit cards the most ideal payment choice. With the increase in credit spend, managing finance charges is more vital. People are spending freely but not wisely.
Lack of awareness on interests charged
Almost six out of 10 card users say they are not aware of the interest they pay on an outstanding balance. More men than women admit to being poorly informed about interest rates. Even among those who claim they aware of interest rate, nearly 1/3rd of them recalls the interest rate is between 15% to 18%.
When probed more in their lack of ability to recall the interest rate charged, Most people feel banks do not put enough effort into explaining their interest rates or communicate it in a visible manner. Few mentioned interest rates are shown in tiny fonts in credit card statements or banks websites.
Interest rate cap effective from 01st of November
Card interest rates in Sri Lanka typically range between 28–30% , but Commercial banks had increased the annual interest rate on credit cards up to 32 percent recently. But now the central bank intervened and imposed an interest rate cap. It should be noted that With effect from 01 November 2019, in the case of credit card advances, the maximum interest rate applicable will be 28% per annum
Card users Find it difficult to settle dues on time
Of those surveyed, only 20% settled their dues on time. But nearly 1/3rd of the card users find it difficult to settle the balance on time and uncertain about their ability to meet financial commitments. Their level of understanding of how late payment fee is charged is poor.
Accuracy of billing, SMS alerts, and the security/ safety of cards are at satisfying levels according to the survey, the lack of transparency on the interest rates charged and late payment fee deducted is a cause for concern.
Sparkwinn Research is an independent research agency based in Colombo and studies consumer and social issues to provide data-centric insights. Sparkwinn recently conducted a category understanding study among credit card users. The study explores customer awareness, engagement, and experience with regard to their credit card usage. 200 face to face interviews were conducted among credit card users in the Colombo district. The Full report can be downloaded at www.sparkwinn.com
Download Full Report Here: http://www.sparkwinn.com/wp-content/uploads/2019/10/Sparkwinn_Report_Understanding_Credit-Card_Users_Sri-Lanka_Sep_19.pdf
