The central banks of six Middle East countries reportedly have come together to ask banks in the region to reduce their credit card interest rates, which they say are unacceptably high.
Representatives of the central banks on the Persian Gulf Cooperation Council have asked the region’s commercial banks to reduce the annual interest rates on credit cards to levels comparable with Western nations, which is approximately 16%, according to Tehran Times, a local newspaper in Iran.
The council consists of central bank representatives from Kuwait, Bahrain, Saudi Arabia, the United Arab Emirates, Oman and Qatar. Cardholders in those countries pay interest rates ranging from 26% to 36%, according to data from banks operating in those countries.
The central banks have tied high interest rates to low credit ratings and to the increased risk of losing money from bad loans, according to the Tehran Times.
In the Persian Gulf region, the interest rates charged on credit cards do not reflect the borrowers’ credit ratings. Instead, the issuers base them on loans borrowed and repayment ability.
The council did not respond to requests for comments by deadline.
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