This is signaled by the fact that banks have kept interest rates the same on credit cards, while continuing to adjust the costs of traditional loans. Credit card interests now range between 15% and 28% a year, but very few banks charge interests of less than 20% a year.
“There has been stagnation on the credit card segment lately, and interests recorded very slight fluctuations. Banks were very focused on selling credit cards in 2009 and 2010, but now these products have moved away from the spotlight. Traditional loans are being promoted again,” says Liviu Andrei, chief executive of loan broker Alliance Finance.
Only some of the big banks sell cards with interests of less than 20% a year, i.e. those that made several adjustments in previous years. For instance, BRD charges an interest of 14.5% a year, while BCR, CEC Bank and ING Bank charge interests of 17% a year. BRD, as well as CEC and ING, entered this market segment relatively late and came with a more aggressive pricing policy trying to make up for lost ground.
On the other hand, medium-sized banks, such as Garanti, Credit Europe (the current market leader, with over 330,000 cards) continue to keep interests at 27% to 28% a year. However, cards with very high interests come with incentives such as interest-free installment payments for purchases, and bonuses for transactions conducted with partner merchants.
“If you have a significant program of merchant incentives, costs are different than in the case of a standard credit card without a loyalty program attached. Banks have other internal costs, as well,” specifies Catalin Cretu, general manage of Visa Romania.
The model of credit cards that allow installment purchases with zero interest rate on condition that the monthly installment is repaid during the grace period, was first introduced on the Romanian market by Turkish bank Credit Europe, with Garanti joining in later. Raiffeisen and BCR tapped this niche in 2010, while Banca Transilvania only introduced interest-free credit card installment payments this year.