The Board of Directors of the Bank of Russia decided not to introduce restrictions on the full cost of credit (FCC) for credit cards from January 1 to March 31, 2025.
This decision is due to the identified cases of incorrect calculation of the FCC for cards by a number of large banks, which led to an underestimation of the average market value of this indicator for the third quarter of 2024. Since this value is used to establish the maximum level of the FCC for the first quarter of 2025, its adjustment could lead to a decrease in the availability of credit cards for citizens.
The Central Bank announced the inadmissibility of such practices and sent instructions to credit institutions on the need to correct errors in calculations and switch to a correct methodology. The regulator emphasized that the low interest rates offered by banks during promotional periods cannot serve as the basis for calculating the FCC, since after this period, rates may increase significantly, which misleads borrowers.
In addition, the Bank of Russia noted that the FCC should be calculated based on the maximum payments of the borrower, which are valid after the end of the promotional period, and not on the basis of reduced rates that are temporarily in effect.
The Central Bank also explained that a moratorium on the establishment of restrictions on the FCC is usually introduced in the event of significant changes in market conditions, including rates, when the pricing of credit products is adjusted with a delay.
With regard to other categories of loans, FCC restrictions remain in place. Thus, for most loans, with the exception of mortgage consumer loans for the purchase or construction of housing and land plots, as well as loans from microfinance organizations, credit consumer cooperatives and pawnshops, the FCC restriction of 292% per annum or 1/3 of the excess over the average market value established two quarters earlier continues to apply.
The full cost of credit (FCC) is the amount that the client must return to the bank under the concluded agreement. It includes the principal debt, interest on the loan and payments provided for in the loan agreement, as well as others that actually depend on the terms of the loan.
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