The Bank of Russia's Board of Directors has decided to remove the effective interest rate (EIR) limit on credit cards for credit institutions from January 1 to March 31, 2025. This decision is part of a moratorium imposed by the Bank of Russia in response to significant market changes that may affect the EIR, such as fluctuations in market rates and delayed adjustments in credit product pricing.
For most loan categories, monetary tightening since the beginning of the third quarter of 2024 has led banks to increase deposit rates by 3.6 percentage points. This has quickly influenced their market value, allowing legally permitted deviations sufficient for uninterrupted lending.
However, certain large banks have reportedly engaged in incorrect practices regarding credit cards, resulting in an underestimated average market value of the EIR for the third quarter of 2024. Since this value serves as the basis for setting the maximum EIR level for the first quarter of 2025, continuing with these restrictions could reduce credit card affordability.
Acknowledging growth in market rates, the Bank of Russia has decided to lift the maximum EIR on credit cards temporarily. An information letter was issued addressing inadmissible practices and ordering banks to correct their methods for calculating EIRs. Meanwhile, existing macroprudential measures will help manage potential increases in borrower debt burdens.
The current EIR limit remains applicable at 292% per annum or one-third above the market average from two quarters prior for other loans except mortgage loans intended for purchasing or building housing or land plots. These exceptions apply from October 10, 2024, through March 31, 2025, following a previous decision by the Bank of Russia Board dated October 10, 2024.