Credit card interest rates and fees going up at some banks in Singapore
The rising interest rate environment has seen banks making multiple revisions to home loan rates this year. Now, some lenders are raising interest charges and fees for credit cards.
SINGAPORE: At least two banks in Singapore have announced changes to interest charges and fees that apply to credit card bills.
One of them is HSBC, which is raising the interest rate on outstanding credit card balances from 25.9 per cent per annum to 26.9 per cent.
Late payment fees - an additional flat fee imposed when credit card holders do not pay the minimum sum by a specified due date - will also go up from S$55 to S$100.
The bank is also increasing administrative fees for foreign currency card transactions from 1.8 per cent to 2.25 per cent.
These changes will take effect from Jan 4, 2023.
HSBC last adjusted its interest charges in August 2017, while the administrative fee for foreign currency transactions has not been revised since November 2018.
The upcoming revision in credit card fees and charges is part of the bank’s “periodic review” and is “in line with industry standards”, a spokesperson told CNA.
The bank also said it has not observed any major increase in late payment charges this year.
Another foreign lender, Maybank, revised its fees and charges back in October.
The interest rate for credit card holders who do not pay their bills in full by the due date or take on a cash advance now stands at 26.9 per cent per annum, up from 25.9 per cent.
Those with late payments will be charged either 5 per cent of the minimum payment due or S$100, whichever is higher. Before this, the fee was 5 per cent of the minimum payment due or S$80.
Maybank also hiked the fee for taking a cash advance – a cash loan taken out against one’s credit limit. This is now at a minimum of S$15 or 6 per cent of the cash loan, whichever is higher, compared to S$15 or 5 per cent previously.
Other lenders that replied to CNA’s queries would only say that their fees and charges are evaluated regularly.
DBS, Singapore’s largest bank, said it conducts “periodic reviews of the interest rates charges based on market conditions and economic trends”.
Its interest charge on outstanding credit card balances has been at 26.8 per cent since end-2018.
“Credit card holders will be informed in advance about any adjustments to credit card interest rates,” the DBS spokesperson said.
OCBC, whose credit card interest charge is currently at 26.88 per cent, said it did not make any changes to its interest rates and fees this year. But these are “evaluated on a regular basis” and “may be adjusted according to market conditions”.
“We encourage customers to pay their credit card bills in full, to avoid incurring additional charges,” said head of portfolio and lending management Kenneth Tan.
UOB told CNA it has no plans to change credit card finance charges at the moment. The local bank last adjusted interest rate for its credit cards in January 2020 from 25.9 per cent to 26.9 per cent.
“However, we do review our credit card finance charges on a regular basis and will give our customers ample notice should there be adjustments needed,” the spokesperson added.
Credit card owners should also take note that card-related fees that are subject to the Goods and Services Tax (GST) will likely be revised, as the GST goes up from 7 per cent to 8 per cent next month.
This will include credit card annual fees.
Citibank, for one, has said on its website that the annual membership fees for its credit cards “will be revised to reflect the change in GST rate to 8 per cent, as applicable”.
This comes after a year of unrelenting interest rate hikes by global central banks, which have repercussions for all types of borrowing from mortgages, car loans to credit cards.
Banks in Singapore have thus far revised home loan rates multiple times this year.
Data from the Monetary Authority of Singapore (MAS) showed credit card debt in Singapore on an uptrend but credit quality – a measurement of an individual’s ability to repay their debt – has remained healthy.
Outstanding credit card balances rose by 16 per cent year-on-year in the third quarter, the strongest increase since 2011, according to the MAS’ annual financial stability review released last month.
Outstanding credit card balances as a percentage of personal disposable income also rose slightly to 4.1 per cent in the third quarter.
However, MAS noted that credit quality of short-term debt “remained healthy”.
“As a share of personal disposable income and total number of card holders, rollover balances and number of revolvers have remained below their long-term averages, although they have edged up slightly to 2.1 per cent and 20 per cent, respectively, in the third quarter,” it noted.
A revolver typically refers to a borrower who carries a credit card balance from month to month.
In addition, the credit card charge-off rate – which refers to the bad debts written off divided by the average rollover balance – dropped to 3.5 per cent in the third quarter.