Because interest rate levels in Switzerland have gone up again in 2023, the Swiss federal government has decided to raise the maximum legal interest rate for personal loans and overdraft loans in 2024.
In Switzerland, the interest rates for personal loans and lines of credit are capped at maximum legal rates. These caps are linked to a reference index rate. At least once a year, the federal government checks whether the reference index rate has changed, and adjusts the maximum interest rates for consumer loans accordingly.
From January 1, 2024, consumer loans in Switzerland will be capped at these maximum interest rates:
- 12 percent interest per annum for personal loans.
- 14 percent interest per annum for overdraft loans, including credit card balances that are carried past their due date.
These are the maximum legal interest rates. Lenders are free to use lower interest rates.
The new caps do not apply to existing loan agreements, but only to those created from January 1, 2024.
Second rate hike within a year
For many years, the maximum interest rates for consumer loans sat at 10 percent for personal loans and 12 percent for overdraft loans – the lowest maximum rates allowed for by Swiss law. But because of climbing interest rate levels, the maximum interest rates were already raised on May 1, 2023.
How are credit cards affected?
The interest rates that many Swiss credit card issuers charge for balances carried over past their due date are close to the highest legal interest rate. The limit for overdraft loans is currently 13 percent, but will be 14 percent next year. Many Swiss card issuers already charge 13 percent, while some charge 12.95 percent, 12 percent, or 11.95 percent. The lowest rate from any card issuer is currently 9.4 percent.
“We can expect to see many credit card issuers raise their interest rates by one percentage point in the coming year,” says moneyland.ch CEO Benjamin Manz. “As before, not paying your credit card bill in full and on time is a bad financial move.”
How are personal loans affected?
The cost of new personal loans will continue to go up. When you get a new loan, the interest rate you get will continue to vary based on your creditworthiness. The better your creditworthiness is, the lower the interest rate you get will be. “With the maximum legal interest rate for loans being raised to 12 percent next year, we can expect to see the interest rates of personal loans climb by an average of one percent,” says Manz. However, borrowers who already have personal loans they are paying off are not affected.
Good to know: moneyland.ch offers a personal loan comparison and a credit card comparison.
More on this topic:
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