Consumer debt trap when interest rates skyrocket

Interest rates on card loans have reached nearly 50%/year

In November, banks in the Big 4 group announced a sharp increase in credit card interest rates. At Vietcombank, interest rates applied to card types increased from 15-18%/year to 18-22%/year (an increase of 3% to 4.5%/year depending on the card type). At BIDV and VietinBank, interest rates for many types of cards also increased to 22%/year.

At some private joint stock commercial banks such asOCB and Techcombank, in the past 2 months, interest rates on credit cards have also been adjusted to increase sharply. Accordingly, the highest interest rate on credit cards at OCB is up to 37%/year and at Techcombank is up to 38.8%/year. Previously, VPBank also announced an adjustment of credit card interest rates with the highest interest rate being 3.99%/month, or nearly 48%/year...

Not only consumer loan interest rates, but also home loan interest rates for individuals have increased sharply. According to a survey by Dau Tu Newspaper, if at the beginning of this year, home loan interest rates (floating) were only around 10%/year, now they have reached 12-15%/year, depending on the bank.

Consumer loan interest rates increased sharply during the year-end shopping season, while floating home loan interest rates also increased sharply, putting many customer groups at risk of falling into bad debt.

Deposit and lending interest rates have increased sharply due to liquidity pressure and high credit demand at the end of the year. In addition, this is the period when banks focus on mobilizing capital to prepare for the next high growth cycle.

The government has set a target of double-digit growth in the coming period. To serve this target, banks must prepare a large amount of capital to meet capital needs. If just a few banks increase interest rates, the remaining banks must also adjust to compete, so the interest rates of the whole market have been adjusted recently.

- Mr. Nguyen Quang Huy, CEO of Faculty of Finance and Banking (Nguyen Trai University)

Dr. Nguyen Tri Hieu, Director of the Institute for Research and Development of Global Financial and Real Estate Markets, warned that the trend of increasing interest rates will continue to spread in the coming time, when credit enters the peak season at the end of the year.

“Deposit interest rates have increased sharply in recent months, so lending interest rates cannot help but increase accordingly,” Mr. Hieu commented.

Deposit interest rates have shown signs of increasing since the second quarter of 2025 and have increased rapidly in recent months. In November 2025 alone, more than 20 banks increased deposit interest rates. Meanwhile, lending interest rates for priority sectors are still encouraged by the State Bank (SBV) and the Government to remain low. This has narrowed the NIM gap of banks, forcing banks to increase interest rates for sectors not on the priority list.

In the context of high interest rates, especially home loans and consumer loans, experts advise borrowers to pay attention to loan risk management to avoid financial plan failure and bad debt. The Vietnam Real Estate Brokers Association has just recommended that home buyers be cautious with liquidity and interest rate risks, and should not borrow more than 50% of the house value.

The increase in lending interest rates for individuals will also have a negative impact on the market and businesses. Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, warned that the increase in interest rates will cause a “double risk” for real estate businesses, not only will the financial costs of the business increase, but the purchasing power of the market will also decrease.

Capital shortage is putting great pressure on the economy.

According to VIS Rating's report, the system-wide loan-to-deposit ratio (LDR) at the end of the third quarter of 2025 was 111%, the highest level in 5 years. Meanwhile, the figures just announced by the State Bank of Vietnam also show that, as of the end of September 2025, capital mobilization is "short" VND 1.6 million billion compared to the credit scale. The rapidly increasing credit demand at the end of the year continues to put pressure on liquidity and interest rates.

Dr. Can Van Luc, a member of the Prime Minister's Policy Advisory Council, said that the increase in deposit interest rates is understandable in the context of credit growth of about 15% in 10 months, while capital mobilization has increased slowly. According to this expert, capital mobilization of banks is facing fierce competition from other channels such as stocks, cryptocurrencies, real estate, startups, etc. Therefore, although deposits in banks are at a record level, they are still increasing slower than expected and much lower than credit growth.

According to experts, the mobilization interest rate has been "forced" to stay low for quite a long time, so the current adjustment is difficult to avoid. The current increase in interest rates is in line with the law of supply and demand, ensuring the interests of both borrowers and depositors. However, according to experts, the possibility of interest rates reversing to increase sharply is unlikely, the reason is that the health of businesses is still quite weak and the monetary policy trend is still loose.

In the context of banks being under pressure on both input and output, interest rates in some areas that are not considered "priority" such as consumption, real estate, etc. will be affected first.

In addition, according to Dr. Can Van Luc, the Government and the State Bank still require the banking system to be stable, even reducing loan interest rates. Therefore, banks must make more efforts to reduce costs and accept narrowing profit margins.

Comment (0)