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Credit Card Penalty Fee: Credit cards are usually used to pay bills etc. If there is a shortage of money while purchasing something, then a person makes the payment through credit card. However, it is important to pay on time, otherwise the bank has to return the amount with high interest. Now even the Supreme Court has given permission to charge high interest on credit card default. 

Supreme Court stays the decision of NCDRC

Actually, banks charge high interest if the credit card bill is not paid on time. When this matter reached the National Consumer Court (NCDRC), the commission limited the interest rate on credit cards to 30 percent.

Now the Supreme Court has stayed this decision of the National Consumer Forum and has allowed the banks to charge high interest on credit card defaults. While the banks have heaved a sigh of relief with this order of the Supreme Court, the credit card users now need to be more careful in paying the bills on time.

Banks had knocked the door of the court 

With this decision of the court, now the bank can impose penalty on credit card users for late payment as per its discretion. The Supreme Court gave its decision after the appeal of many other banks including HSBC, Standard Chartered and Citi Bank.

Banks say that if the interest rate is limited to 30 percent, it will not help them deal effectively with card defaults. With this decision of the court, banks can now charge up to 49 percent interest as penalty on late bill payment of credit card.

Avoid more penalties this way

This decision of the court has increased the problems of credit card users because now every bank will levy charges on late payment as per its own discretion. In such a situation, if someone's credit score is already bad, then he will have to pay more penalty. Whereas those who usually pay the bill on time can negotiate for a better plan with the bank.

In such a situation, if you want to avoid paying high penalty fees to the banks, then make the bill payment on time. Stay up-to-date regarding the credit card, such as keep track of whether the bank has made any change in the penalty rate or not and if yes, then how much impact will it have on you. To avoid high interest, maintain a healthy credit profile by paying the outstanding amount on time.

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