Credit-card holders are being hit with fees and interest charges of up to 86 per cent a year, the Consumer Council said yesterday as it demanded a review of the industry and a ceiling on the charges it levies.
Fine print in card contracts gave banks the right to impose a range of confusing and unexpected fees and to bill customers for hefty legal fees they run up chasing debts, the council said.
Dr Michael Tsui Fok-sun, deputy chairman of the council's publicity and community relations committee, said the Hong Kong Monetary Authority had been asked to look at the 'true costs' of credit cards and consider a cap.
'We have unveiled a myriad of interest rates and charges that are at the disposal of credit-card companies. Often such charges and the methods of their computation are far too unclear and complex for the vast majority of credit-card holders to understand,' he said.
'Often they say interest is two per cent [per month] and you think at the end of the day you only have to pay 24 per cent per annum, but this may not be true. Consumers ought to be aware that, with the handling fees, they're paying more than what they think they're paying.'
Handling fees and service charges sent the cost to customers soaring. In an extreme case, taking a cash advance of $10,000 and paying it back in 30 days would cost $710 extra, the equivalent of a yearly interest rate of 86 per cent.
'That's very high, and it's actually higher than the spirit of the law,' Dr Tsui said. Moneylenders are not allowed to charge more than 60 per cent a year interest, but the law does not apply to banks.