Hang Seng Bank has increased its credit card interest charges for late payments by 10 percentage points in an attempt to deal with mounting bad debt.
Higher annual interest rates for late payers will be introduced with a maximum 35.25 per cent for purchases and 39.53 per cent for cash advances. The interest rates for customers who make the minimum payment on time will remain unchanged at 25.5 per cent for purchases and 29.04 per cent for cash advances.
Credit card debt has been linked to rising personal bankruptcies, which have tripled in the first five months of this year compared with the same period last year.
Banks want to share positive credit information about credit card customers to reduce the number of personal bankruptcies. Banks are only able to share negative information such as the identities of customers who fail to repay debts.
The late-payment charge will rise to between HK$50 and HK$150 from the previous HK$30 to HK$100. A fee of HK$100 per month will now be charged for exceeding the credit limit by 5 per cent compared with 10 per cent previously. The changes take effect on August 1.
As of December 31, Hang Seng Bank had issued 930,000 credit cards. A spokeswoman for the bank said the charges would only affect the small number of customers who were late with minimum repayments.