A recent report revealed that in 2011, Hong Kong’s watchdog Consumer Council received 215 complaints about fee disputes in connection with banking/financial services. About half of them (110 cases) involved credit cards, 28 percent (61 cases) on general bank account services such as deposits, auto-pay and money transfer. The remaining 20 percent (44 cases) involved investment and loan services.
The report was compiled in response to the theme of this year’s World Consumer Rights Day – Our money, our rights: campaigning for real choice in financial services. The campaign is advocated by the Consumers International and falls on 15 March of every year.
Highlights of the report are:
1. The intermediary bank fees of remittance services
When using remittance services, consumers might not be fully aware that it involves the handling charges of both the intermediary banks and beneficiary banks. However, the Council found that the basis of handling charges for intermediary banks or beneficiary banks was not clearly shown in the fee schedule of all banks. Some banks disclosed the fee for each transaction to certain designated countries; some calculated the charges according to the remittance amount with a minimum and a maximum intermediary bank fee; while some others did not list the charging basis at all and only provided the fee details upon customer request.
The Council urges the banks to improve the transparency in fee structure and inform their customers how remittance fees are charged before they use the services.
2. The cost of using credit cards for cash advances
It might be convenient to use credit card for cash advance, but some consumers might not understand the calculation of its interest rate and that they can no longer enjoy the interest-free repayment periods. The Council reminds consumers that interest for credit card cash advance is accrued on a daily basis, and is levied from the date of transaction until the outstanding amount is settled in full.
Therefore, the interest of cash advances shown in the credit card monthly statements only reflects the interests calculated up to the statement date. If consumers intend to repay the full outstanding amount on the payment due date, they will have to include the interests accrued between the statement date and the payment due date, which is not shown in the statement.
The report advises consumers to check with the bank for more information if unclear about Annualised Percentage Rates (APRs), interests or its calculation, etc. They are also advised to repay the amount in full as early as possible, not to wait until the payment due date and avoid minimum monthly payments. They should also consider applying for personal instalment loans or cash-in plans for which consumers can repay the loan by instalments and be better planned for repaying the interest expense.
The Council has forwarded the report to the Hong Kong Monetary Authority (HKMA) and the Hong Kong Association of Banks (HKAB) for their references.
(Source: Consumer Council)