Banks should calculate TCC on cards based on maximum possible amount of borrowers’ payments
Low interest rates on credit cards in force during the promo period cannot be used as a basis for calculating the total cost of credit (TCC). The regulator sent the relevant information letter to credit institutions.
Some banks offer a promo period with minimum interest rates for credit cards. Upon the expiry of this period, interest rates for customers increase significantly. The Bank of Russia has identified that individual banks calculate the TCC based on the interest rates in force during the promo period.
The document stipulates that such a method to calculate the TCC contradicts the law ‘On Consumer Loans (Microloans)’ and misleads borrowers. It instructs creditors to calculate the TCC based on the maximum amounts of borrowers’ payments in force outside of the promo period.