This information was shared by Mr. Vo Minh Tuan, Director of the State Bank of Vietnam, Ho Chi Minh City branch, at the regular press conference in Ho Chi Minh City on the afternoon of March 21.
Mr. Vo Minh Tuan said that according to the current regulations for calculating interest on regular lending products (excluding loans via international credit cards), interest is calculated based on the principal. If there is late payment interest, it will be calculated additionally, but not more than 10% of the late interest amount. However, this regulation does not apply to credit card loans.
Explaining why there is no such regulation for lending through credit cards, Mr. Tuan gave a specific example.
" When buying a product worth 5 million VND, depending on the bank, customers will not pay interest for the first 30, 40, or 55 days. During the period of spending, if you borrow normally, you have to pay interest from the day you spend, but credit cards have a preferential interest-free period of 30-55 days. But if you do not pay the full 5 million VND during this period, the bank will start calculating interest on the unpaid amount. At that time, the bank will apply interest. Currently, interest rates for loans through credit cards range from 20-40% ," said Mr. Tuan.
With this method of calculating compound interest, Mr. Tuan said that not only Eximbank but many other banks are also applying it.
Mr. Tuan recommends that people who use banking services and products should know the basic utilities as well as the bank's pricing and fee policies.
Mr. Vo Minh Tuan, Director of State Bank of Vietnam, Ho Chi Minh City branch.
Regarding the case of a customer whose debt of 8.5 million VND was converted into 8.8 billion VND after 11 years of opening an Eximbank credit card, Mr. Tuan also informed that the State Bank has requested Eximbank to verify the case, work with the customer to ensure the rights and interests of both the customer and the bank, and report in writing to the State Bank.
To prevent similar incidents from happening, Mr. Tuan said that the State Bank of Vietnam, Ho Chi Minh City Branch, will direct credit institution branches to review cardholders, find out about cardholders who have not used their cards for work for a long time, and find an agreement between the bank and the customer to protect the interests of all parties.
In the interaction between customers and banks, Mr. Tuan recommends that banks need to inform customers about balance fluctuations via email, text messages, and postal mail.
At the same time, credit institutions are required to provide the main contents of products and services for customers to understand, and at the same time, to publicize the fee schedule and only collect fees according to the public fee schedule.
Regarding whether it is reasonable to calculate interest like that, Mr. Tuan said that from 8.5 million after 11 years it increased 1,000 times to 8.8 billion, looking at it, it is unreasonable.
However, this irrationality has its cause, basically this is the way of calculating compound interest (interest on interest), in which some banks use this calculation method in credit card transactions.
"Banks operate on reputation, if something like this happens it will more or less affect their brand and weaken their competitive advantage," Mr. Tuan said, asking banks to pay attention to the legitimate interests of customers.
Also at the press conference, Mr. Nguyen Ho Hoang Vu, Deputy General Director of Eximbank, informed that on March 19, Eximbank representatives met with customers.
Eximbank and customers discussed frankly, in the spirit of cooperation, understanding and sharing, and agreed to coordinate to resolve the case, ensuring the interests of both parties in the shortest time.
" Eximbank and the customer agreed to handle the case, ensuring a reasonable interest rate for both parties and will notify the media as soon as possible. There is no way the bank collected 8.8 billion, there is absolutely no such thing," said Mr. Vu.
" We are very sorry for what happened," Eximbank's Deputy General Director added, saying that the bank has been actively working with customers.
Normally, for Eximbank's overdue card debt handling process, the bank's card processing staff will base on the customer's card debt situation to propose to the leadership an appropriate interest and fee collection level before working with the customer. This fee must be approved by the leadership before being reported to the customer.
" However, in the recent case, the staff worked mechanically without following that procedure and sending a notice to the customer, leading to frustration in the past time," said Mr. Vu.
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