Citibank is lowering its credit card interest rates after being accused by a legislator of charging cash advance rates that border on extortion. A Citibank spokesman said yesterday that, effective next month, credit card holders who miss their cash advance payments will be charged less than 45 percent. The rate applies to all cards issued by the bank.
In the Legislative Council yesterday, legislator Albert Ho Chun- yan urged Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung to provide answers following a report in the Chinese press claiming Citibank has been charging customers as much as 50 percent.
"Under the Money Lenders Ordinance, if the effective interest rate on a loan exceeds 48 percent, the loan transaction concerned shall be presumed to be extortionate," Ho said. "Yet, authorized institutions including banks are exempt from the ordinance."
Ho wanted to know if the Hong Kong Monetary Authority is monitoring the banks properly and whether there is any justification for higher-than-standard interest rates.
"With respect to the case mentioned, the HKMA has already followed up with the bank concerned. The bank has agreed to adjust the relevant interest rate to a level below 48 percent," Chan replied.
The Citibank spokesman said that on December 8 the bank had announced new rates of 44.73 percent for cash advance customers failing to make their first payments, and 49.86 percent for those missing their second payments.
"We regularly monitor market conditions and make adjustments to our rates accordingly," the spokesman said.
"The good news is, effective March, we will be lowering the rate to below 45 percent for customers irrespective of whether they've missed the first or second or third payment."
An HKMA spokesman said the authority will closely monitor the situation and consider the need to improve relevant regulatory arrangements and enhance monitoring actions.
