Regulating Imposition of Credit Card Fees by Banks

17 Mr Lim Biow Chuan asked the Prime Minister whether MAS will regulate the imposition of credit card fees by banks such that all consumers are treated fairly.

The Minister of State for Trade and Industry (Mr Alvin Tan) (for the Prime Minister): Mr Deputy Speaker, fees charged by banks for their services and products are commercial decisions. MAS does not interfere in these decisions, but expects all banks to deal fairly with their customers.

In this regard, MAS requires banks to clearly and conspicuously disclose late payment fees and interest charges in credit card statements, including how such charges are computed. These are the most significant potential charges for credit card users. Where a customer has not paid the prior month’s credit card bill in full, the bank is required to provide in the current month’s statement a projection of the length of time and the total amount, including principal, interest, fees and charges, that the customer will take to fully pay off the entire outstanding balance.

The Association of Banks in Singapore’s Code of Consumer Banking Practice further specifies when and how banks can effectively communicate to customers, relevant information on a broader range of principal terms and conditions, including annual fees, repayment grace periods and interest rates. For example, this code sets out disclosure standards for specific customer engagement touch points, such as when marketing credit cards, when cards are dispatched to customers and in monthly statements.

With transparent credit card fees and charges, consumers can make an informed choice on the product that best suits their needs.

Mr Deputy Speaker: Mr Lim Biow Chuan.

Mr Lim Biow Chuan (Mountbatten): Sir, my point is that most adult workers will have at least one credit card or more and many of these credit card companies do charge several hundred dollars for their annual fees. My experience is that if a consumer writes in, the credit card company is prepared to waive the fee. This also means that if the consumer is not savvy enough, then they will have to pay for the credit card fees.

So, my question to the Minister of State is whether MAS can regulate the imposition of this annual fee by the credit card companies so that those who genuinely need a credit card do not have to pay the annual fee. Because, at the end of the day, the credit card companies do make money from the fees which they charge to the merchants, so it should not be that only consumers who know how to ask for a waiver gets a waiver and consumers who are less knowledgeable will have to pay the annual fee because they do not know how to ask for it.

Mr Alvin Tan: Sir, I thank the hon Member for his supplementary question. Consumers may, indeed, approach banks to request for fee waivers, as the hon Member has mentioned earlier and there are many ways in which they can do so, like writing in. I think there are a few new initiatives where you can also call in and there is an automated service.

However, consumers also must be mindful that not all fee waivers will always be granted. The criteria for these kinds of waivers, of course, differ across credit card products as well as issuers. So, before taking up or signing up for a credit card, consumers should take note of the relevant terms and conditions, such as the expiry period of guaranteed fee waivers and the quantum of fees that are chargeable. And for customers and consumers who want to learn more, there are many more tips that can be found on the Association of Banks in Singapore's Consumer Guide on Credit Cards, that is available readily on its website.