Calcutta, July 16: Credit cardholders who pay their bills in time can look forward to some special treatment in a couple of years.

Card issuers are planning to charge a lower rate of interest on the outstanding dues of those with a good repayment record. Those with a history of defaults will be charged a higher rate.

“In the developed markets, credit card issuers charge between 12 and 14 per cent interest from cardholders with a good payment record and 24 per cent or more from individuals with a history of default,” said Rupam Asthana, chief executive officer of SBI Cards and Payment Services.

“By 2009-10, credit information about individuals will be easily available as several credit information agencies will start functioning. Credit card issuers can then easily identify customers based on their history,” Asthana added.

As of now, only Credit Information Bureau Pvt Ltd (Cibil) is in operation. Two others — Experian International of the UK and Crisil — have evinced interest in entering the business soon.

“We cross-check all our credit card applications with Cibil, but not all banks share their customer data with the bureau. At present, the database of Cibil is not well prepared,” Asthana said.

“Once these agencies come up, it will be easy for us to know to what extent an applicant is leveraged with debts such as personal loan, housing loan, car loan or other credit cards vis-à-vis his/her monthly cash flows and payment history,” Asthana said.

“Credit card issuers here are increasingly looking at differential rates. They are offering a lower interest rate on premium cards than on regular ones. This is because the premium cardholders are high-income individuals who generally do not default on payments,” said N. Jha of HDFC Bank.

He added that the bank had been offering monthly interest rates between 1.5 per cent and 1.6 per cent on its premium credit cards against 2.95 per cent on regular cards.

“The emergence of the credit information bureau will help card issuers look closely at defaulting customers and also individuals with a good payment history. People with good credit history will be rewarded with a lower interest rate,” he said.

At present, credit cards are approved based on self-declarations by the applicant on his/her other borrowings and debt liabilities.

“In the absence of a comprehensive credit evaluation system, issuers are incentivising their credit cardholders with cash back and reward points. Right now, all holders of a specific card are charged the same interest rate without any discrimination. But this is going to change in the days ahead. When a comprehensive database of credit information becomes available, we will start charging differential rates,” said an official of ABN AMRO Bank.

The domestic credit card industry is saddled with 7 to 8 per cent non-performing assets and this is primarily because most of the cardholders have more than one credit card.

“People here look upon credit cards as a solution to their long-term borrowings. But credit cards are meant for managing short-term cash flow mismatch. Because of this misplaced perception, people often fall into a debt trap and default on payments,” Asthana said.