Looking to save Tk500, customers may face penalties upwards of Tk2,000
Bangladesh Bank has ordered all the banks of the country to waive late payment fees and other charges on credit card bills till March 31 in light of the coronavirus pandemic.
Some banks have used clever wording in their SMSs sent to customers regarding this matter. They have said that the late fee will be waived but did not mention anything about other charges or fees incurred due to late credit card bill payment.
Customers are suspecting that their respective banks will impose various other charges, defying the central bank’s directive.
In addition, many customers also suspect that they will have to pay high amounts of interest if they do not pay their credit card bill on time.
According to the circular issued by Bangladesh Bank on April 4, any client whose date of paying their credit card bill falls on any date from May 15 will be exempt from paying any late fee incurred due to late payment.
Anyone who has paid such bills from March 15 till now will get that money returned or their banks will adjust that amount with future bills.
The banks have sent SMSs to their customers informing them of the late fee waiver but have opted to use the word “fee” instead of “fees”. This has made it unclear whether other fees incurred due to late payment, such as the penalty interest rate, will be waived or not.
The Social Islami Bank Ltd, in their SMS, has clearly said that they will only waive the late fee.
Similarly, Eastern Bank Ltd (EBL) has only mentioned the late fee. There was nothing stated about the other fees in their SMS.
Many other banks have used similar phrasing and mentioned the waiver of only the late fee.
Contrastingly, Brac Bank Ltd used the plural “fees” and said they are waiving all credit card late payment fees.
Bangladesh Bank Spokesperson and Executive Director Serajul Islam said: “We will look into the matter next June. We will not check the SMSs they have sent. We will check whether they have followed our directives or not.”
“In the directive, banks were prohibited from taking late fees and any other charges related to that. The waiver of interest was not mentioned there. Customers will have to pay interest if they do not pay credit card bills on time,” he added.
Commenting that Bangladesh Bank cannot prohibit other banks from charging interest, Serajul said: “The customers only have to pay interest on their credit card dues if they do not pay the bill on time. So it is better to pay it in a timely manner.”
Several bank officials have also indicated that they will not forgo the interest on credit card bills. It is also uncertain whether they will impose extra fees on the customer in the future or not.
In this situation, looking to save Tk500, customers may face penalties upwards of Tk2,000.
However, Association of Bankers, Bangladesh (ABB) Chairman and EBL Managing Director Ali Reza Iftekhar has assured that no bank will disobey the central bank’s directive regardless of what SMS they have sent to their customers.
“During normal circumstances, some banks imposed VAT on late fees, while some imposed penalty interest on that. But we have waived the late payment fees till March 31, so there will be no VAT or interest imposed on that amount,” he said.
Nevertheless, he requested the credit cardholders to pay their bills timely as they would have to pay interest on the bill even if their late payment fee is waived.
Increase in expenses
Credit card late payment fee ranges from Tk300-500 at most banks, while it is Tk1,000 at one or two banks.
Suppose a person has bought a product worth Tk1 lakh with their credit card and the last date of their bill payment is April 16.
If they fail to pay the bill on time, they do not have to pay the Tk500 late fine due to the waiver.
But they do have to pay 14 to 16% interest on that. They will have to pay around Tk1,400 every month against the Tk1 lakh.
If they do not pay the bill til March 31, they will have to pay around Tk3,500 in June only as interest.
Moreover, if the banks disregard Bangladesh Bank’s directive and impose other charges, the customer’s expenses will only go upwards.