The interest rate reductions do not apply to credit card debt

Credit cards. Money. Consumption.Oslo: Illustration. Credit cards. Money. Consumption. Photo: Erlend Aas / NTB scanpix

The historical low base rate in Norway does not mean the credit card companies also puts down the interest rate. On the contrary.

– For credit card debt are interest rates is just as high today as in 2008, when Norges Bank’s key rate was 5 percent higher. Some credit card providers have even set up the rate slightly after 2008, says Elisabeth Realfsen, the leader of the website Finansportalen.no, to the newspaper VG.

In an overview Finansportalen has drawn, it emerged that 348 of 382 credit cards used by ordinary consumers have an effective rate of over 25 percent annually by a debt of 20,000 kroner. General interest rates on credit card debt are normally just under 2 percent per month.

– It applies to several years back, but we have seen that some players have put up interest rates in the period where the policy rate is lowered. It is remarkable and suggests that people take up debt no matter how much it costs – someone in this  industry is profiting big, says Realfsen.

Norwegians had last year a total of NOK 82 billion in consumer debt, according to the Financial Supervisory Authority’s report for the first three-quarters in 2015.

The base rate is now at a record low on 0.75 percent, and Norges Bank has announced that it may be even lower in March.

 

Source: NTB scanpix / Norway Today

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