asked the Minister for Finance if he will take steps to ensure that Allied Irish Banks plc and the bank of Ireland reduce the rate of interest charged by them on the credit cards issued by them, which at the moment at 24.6 per cent, is excessively high; and if he will take steps to break up the cartel which exists between the credit card issuing subsidiaries of these two banks which is detrimental to the public interest and to the welfare of the consumer.
Written Answers. - Credit Card Interest Rates.
87.
The supervision of interest rates is primarily a matter for the Central Bank. While the bank has agreed arrangements with the associated banks relating to ordinary deposit and lending rates, these arrangements do not extend to credit card interest rates. The rates of interest on credit cards are set by the credit card issuers by reference to the prevailing consumer lending rates of interest and take account of additional cost factors such as the interest-free credit period on repayments, bad debt experience, operating costs etc.
I believe the best method of ensuring the welfare of the consumer is to encourage competition in the provision of these services. The Director of Consumer Affairs and Fair Trade has been empowered by the Restrictive Practices Act, 1987 to investigate any alleged restrictions on competition. The Deputy will be aware, however, that one bank has recently lowered the rate of interest charged on the credit card issued by it. No doubt the other issuers of cards will have to take account of this in deciding their interest rate stance.