Credit cards are considered to be one of the most used financial products offered by banks and non-banking institutions. There are different types of credit cards available today. Credit cards can have different characteristics as well as conditions and charges. The common characteristic for them is that you pay interest rate on the outstanding debt i.e. the amount of approved credit you have used. Noteworthy mentioning is that credit cards as a financial product bear one of the highest (if not the highest) interest rate. Thus, credit card debt is considered to be the most expensive form of debt you could have. For this reason, many of us are complaining about the cost of credit card debt (although nobody forced us to use the credit card).
Having said that, do you know the cost of your credit card debt? Do you know the APR you will pay when you use your credit card? Do you know if the cost of credit card debt in your country is higher or lower compared to other countries?
If you can answer these questions than you are aware about the cost of your credit card debt which is great. On the other hand, if you are complaining about the APR on your credit card, then you should continue reading this article. The aim of this article is to make comparison of the annual percentage rate paid by credit card holders in different countries.
Being one of the most expensive form of debt, it would be nice for people to know the cost of credit card debt in other countries. There are 20 countries taken into consideration for the comparison made later on. The countries included in the comparison are from America, Europe, and Asia. Australia and New Zealand are also considered.
Before we go to the presentation, there are couple of things that should be pointed out. First and foremost, keep in mind that the APR you are going to pay on your credit card is tightly related to your credit score. Meaning that the rate you are going to be charged with depends largely on factors such as related to the credit score. Consequently, in most countries there are APR’s at the lower end and at the higher end. Again, your credit score will have major impact on the APR you will pay.
Second, the information is collected from the website of banks offering their services in the country under consideration.
Third, credit card APR is taken from one of the top five banks according to list presented in the Banks around the world. Meaning that the credit cards APR stated for each country are representing, till certain extent, the APR charged by the biggest banks in the specific country.
Fourth, stated annual percentage rate is mostly referring for purchases made with credit cards. Consequently, do not forget that the APR and interest rates charged for cash withdrawals can be much higher. In addition the presented APR’s can be charged by different types of credit cards such as: travel, rewards, cash back or low interest credit cards.
Table 1 serves the purpose to present the APR charged by banks in the specified countries. The first thing which can be noticed is that there is no low and high value for four countries. These countries are: India, Singapore, Latvia and Switzerland.
Table 1: Overview of APR in selected countries
|Annual Percentage Rate – APR (%)|
From the above table it is becoming evident that credit card holders in Mexico have the highest cost of credit card debt. Namely, they pay anywhere from 67.2% up to 127.8%. On the other hand, Italian credit card holders enjoy the lowest APR. Namely, the bank taken as an example for this article on the lower end charges 10.7% while on the upper end this bank charges 18.67%.
If you consider the highest upper limit of cost charged by banks, it can be noticed that the charge for credit card holders in Spain can go up to 32.02%. Thus, except for Mexico, Spain has the second highest upper limit of credit card APR. At the same time, the lowest upper limit is demanded by banks in Greece, where the high cost of credit card debt is 15.72%.
Figure 1 is providing a graphical comparison of the APR charged by banks operating in countries under consideration. The discrepancy that exists between the cost of credit card in Mexico and the remaining countries is highly visible. It can also be seen that credit card holders in India and Singapore have the second and third highest cost of credit card respectively.
The above figure is presenting the lower limit about the cost of credit card debt. On the other hand, the upper level is presented in figure 2. It is evident from figure 2 that the highest interest rate for credit card owners with bad credit score are charged by the banks in Mexico. The second and third highest APR rate is demanded by banks in Spain and China.
Another comparison that could be made is the cost of credit card debt for credit card holders with good or bad credit score. Namely, from table 1 it can be seen that the difference between the low APR and high APR is not the same for all countries. In some countries this difference can be a bit more than 3%, while in other countries this difference is in excess of 10%.
It is evident by now that banks in Mexico charge the highest APR for all types of credit scores. Respectively the discrepancy between the APR changed on customers with good credit score, and the ones with bad credit score is the highest.
Following the Mexican banks, banks operating in Spain and Chine can charge up to 15% more for customers with bad credit score. Credit card holders in Czech Republic can see a difference of 12% in their APR depending on their credit score. This difference for US credit card holders is approximately 9%.
After going through the APR level in different countries, do you still think that you should be complaining about the cost of your credit card debt? Keep in mind that there are many factors affecting the pricing strategy of banks. These factors are directing the size of the interest rate charged by banks for different types of credit. Next time when you complain about the cost of your credit card debt think about the cost paid by credit card holders in Mexico. That is unless you live in Mexico, then you have any right to say that you have highly expensive credit card debt.
What do you think about the APR you are paying on your credit cards? Please provide your answer in the comments bellow.