About 92% of Indian credit card holders shows good repayment habit, says TransUnion Cibil
It said that about 92% of credit card holders often pay a greater amount than the minimum due, following its survey of 1,100 consumers across eight metro cities.
This is the most important takeaway from a survey done by the TransUnion Cibil covering 1,100 consumers across eight metro cities.
What's more, India tops the rank in the percentage of credit card holders that often make payments in excess of their minimum due on their revolving debts each month as compared to other countries.
The study observed that about 92% of credit card holders often pay a greater amount than the minimum due. If consumers fail to pay the minimum due, they are considered as defaulters but when consumers pay anything between the minimum due and the full amount, then they are liable to pay 33-36% interest rate on the amount.
“The delinquency rate has gone down over the years,” the company’s Chief Operating Officer Harshala Chandorkar told ET. “This, along with a healthy growth in number of credit cards is an encouraging sign for the credit card industry,” she said.
India has some 2.7 crore credit cards in the system.
This is the first time TransUnion CIBIL has done such a survey on credit card payment pattern and therefore there was no comparable statistics. However the delinquency trends (90 days or more past due) in December 2016 has improved to 1.51% from December 2015’s 1.65%, showing relatively stable performance overall. The delinquency trend data is based on the data reported by member banks and financial institutions.
"Analysis conducted on long-term payment behaviour suggests that consumers who pay more than their minimum payment due on credit cards are less likely to go delinquent," "Such findings derived from trended data could help improve risk assessment for lenders while providing higher opportunities to consumers with lower risk profile across retail lending portfolios,” she said.
The trended data analysis leverages up to 36 months of historical information.
The study estimated that nine out of 10 credit card users are aware that delay or non-payment on credit card bills negatively impacts their credit history and report.
Interestingly, a significant number -- about 33% -- said they are uncertain about the importance or benefits of paying more than the minimum amount due on their credit card bills.
The firm said the research is part of its continuous endeavour to demystify consumer credit behaviour and highlight the importance of trended data for credit decisions.