The Bank of Israel has ordered Israel Credit Cards-Cal Ltd. (ICC-Cal) (Visa) to change its revolving credit policy on its Active credit cards, and to retroactively reduce the credit for 7,000 cardholders for 2005-08. The Bank of Israel ordered ICC-Cal to refund cardholders for the excess interest paid. The amount of the refund is estimated at NIS 1 million.
The Bank of Israel said that the order to reduce the interest on revolving credit was aimed at "ensuring fair conduct toward customers, so that they will not pay high interest rates for accumulated credit merely because they failed to contact the credit card company every month."
The Banking Supervision Department investigated ICC-Cal's revolving credit interest rate following complaints by Active cardholders. The investigation found that many cardholders did not realize that the Active card was a credit card, not a debit card, or that they had to contact ICC-Cal each month to pay off the credit, in whole or in part. Otherwise, ICC-Cal automatically made a minimum deduction from the cardholder's bank account, and revolved the balance onto the following month, charging very high interest on the amount.
Israel Discount Bank (TASE: DSCT) owns 71.8% and First International Bank of Israel (TASE: FTIN1;FTIN5) owns 28.2%.
Published by Globes [online], Israel business news - www.globes-online.com - on December 22, 2009
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