Starting today, credit card companies will no longer charge cardholders a fee for paying in installments.
Supervisor of Banks Yoav Lehman has ordered the Visa-Cal and Leumi-Visa credit card companies to stop charging fees on installment transactions.
For the past two years, the credit card companies have been charging their clients a NIS 0.43 fee for every monthly installment transaction. The fee was introduced to increase profits.
Lehman said the regulations require banking institutions, including credit card companies, to advise clients of the effective interest rate for every loan. However, the calculation is complicated, involving the product price and the number of installments, in addition to the added fee charged for installment transactions.
Consequently, it is impossible to calculate the effective interest rate at the time of purchase. The fee is therefore illegal and violates the rules of due disclosure, Lehman concluded.
The two credit companies objected to the supervisor's order, but Leumi Card finally gave in and agreed to cancel the fee as of today. Visa Cal has not responded yet, but sources in the Supervisor of Banks' office say it will have no choice but to accede.
Sources in the credit card companies reacted with anger to Lehman's order, claiming they did not need his permission to set credit card fees.
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