Bank of Thailand Extends Minimum Credit Card Payment Relief for Vulnerable Borrowers
PUBLISHED : 3 Aug 2024 at 11:07
The Bank of Thailand has announced that the minimum monthly credit card payment will remain at 8% through the end of 2025. This decision aims to alleviate the financial burden on borrowers, particularly those in vulnerable situations.
The minimum payment rate was initially set to revert to the standard 10% in January 2025, but the central bank has opted to delay this change in light of ongoing economic challenges.
During the Covid-19 pandemic, the minimum payment was reduced from 10% to 5% to assist individuals facing financial difficulties. It was subsequently increased to 8% at the beginning of this year.
According to Deputy Governor Ronadol Numnonda, this decision was made by the Financial Institutions Policy Committee, which recognized that many indebted individuals still require further support as their incomes have not fully recovered.
To incentivize quicker debt repayment, cardholders meeting the minimum payment will receive a cash-back reward of up to 0.5% on their outstanding balance, the central bank stated.
For those struggling to meet the minimum payment, the option to restructure obligations into term loans with installment payments is available.
This policy update does not meet the Finance Minister’s request to revert the minimum payment to 5%.
Thailand’s household debt has surged to 16.37 trillion baht, accounting for 90.8% of the nation’s gross domestic product, increased from less than 14 trillion in 2019, as the economy continues to recover from the pandemic’s impact.
Bank of Thailand Governor Sethaput Suthiwartnarueput has referred to high household debt as “a chronic disease” that continues to pose challenges. This debt burden has contributed to the central bank’s hesitation to lower interest rates from a decade-high of 2.5%, despite calls for action from political leaders including Prime Minister Srettha Thavisin.
The central bank also plans to promote the consolidation of home and retail debt by relaxing loan-to-value (LTV) ratio regulations, aimed at easing overall financial pressures and reducing interest rates.
The Bank of Thailand is committed to monitoring the effect of these new measures and remains prepared to make adjustments as necessary.
