The Swiss government is imposing limits on interest rates for consumer credit, which take effect shortly. Providers have already responded – and they face difficult times as a result.
A new maximum interest rate of 10 percent for cash credit and 12 percent for credit cards in Switzerland takes effect next month, set by the Swiss government as a result of negative interest rates.
Swiss credit providers have already responded by lowering their annual percentage rates, as consumer website moneyland.ch reported.
Falling Rates Across the Board
According to the moneyland.ch, rates have fallen across the board even before the limits take effect.
For example, Cembra Money Bank has lowered its annual percentage rates to 9.95 percent from 14.5 percent. Bank-now now offers credit from 7.9 to 9.9 percent, from 9.9 to 13.9 percent previously. And Cashgate has lowered its rate for consumer credit to 7.9 to 9.9 percent.
The notable exception is Migros Bank, known for its low-price strategy, which has not lowered its rates. But its market-low rate of 5.9 percent has been undermined by Valora’s fintech subsidiary bob Finance, which offers a rate of 4.9 percent and by CreditGate24, which offers 5.79 percent.
Battle Lines Drawn
«The battle to win new clients through lower rates is on,» says moneyland.ch of the government’s measures, even as competition for clients becomes more heated and margins are under pressure.
Cembra had already warned earlier this year that the new rules would hit its business.
