Further interest rate hikes on credit cards likely: BOC
Updated: 2008-12-12 07:33
By Lillian Liu(HK Edition)
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BOC Credit Card (International) Ltd sees room to raise interest rate on credit cards. AFP |
BOC Credit Card (International) Ltd, the card-issuing arm of Bank of China (Hong Kong), said it did not rule out the possibility of raising interest rate on credit cards as the deepening economic downturn has affected card holders' solvency.
HSBC Holding, the largest credit card issuer in Hong Kong, has raised credit card interest rate to 31.86 percent from 26.81 with effect from Feb 1.
HSBC's credit card interest rate hike, which will be followed by other banks, including Bank of China (Hong Kong), will further plague private consumption in Hong Kong, which contributes about 60 percent of the city's GDP.
Despite the government's pledge to boost loans, banks in the city are lifting borrowing costs across all boards, which will hurt the economy, said analysts.
Last week, the London-based HSBC raised its rate for all Hong Kong mortgage loans by 50 to 75 basis points to 3.5 percent to 4 percent.
Dickson So, general manager at BOC Credit Card, said there are an increasing number of personal bankruptcy cases in Hong Kong over the last one or two months due to the surging jobless rate in the city.
"The soaring unemployment rate inevitably gives pressure on banks' impair loan records," So told reporters yesterday on the sidelines of a new credit card issuing ceremony.
BOC (Hong Kong) announced yesterday it is issuing a dual currency credit card with both yuan and Hong Kong dollar as the settlement currencies. Its current credit card interest rate is 26.46 percent
The card, which will be widely accepted on the mainland and overseas, is specially designed for Hong Kong residents, particularly those frequent travelers to the mainland and overseas for business and leisure, the bank said.
The card will be open for application from next month. Priority application forms are available from today at all BOC (Hong Kong) branches.
"The issuing of the card marks a step further for the renminbi business development in Hong Kong," said He Guangbei, vice chairman and chief executive of BOC (Hong Kong).
"Now the renminbi businesses in Hong Kong only include deposit, currency exchange and so on, so trade settlement with renminbi has been widely expected in the city," he added.
The cardholders can enjoy savings on the exchange rate difference, as transactions conducted on the mainland are posted in yuan while those made in Hong Kong and overseas are posted in Hong Kong dollars, the bank said.
(HK Edition 12/12/2008 page2)