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Protecting Credit Card Users


Banks in Hong Kong are strengthening efforts to improve protection of credit card users, and increase the transparency of fees and charges. Since 2011, the Hong Kong Association of Banks (HKAB) has issued recommendations for credit card issuers, aimed at aligning industry practices with international standards.

Most credit card issuers in Hong Kong are licensed financial institutions under the supervision of the Hong Kong Monetary Authority (HKMA). The HKMA requires licensed institutions to comply with the Code of Banking Practice, which includes guidelines for credit card issuers, covering interest charges and sales practices.

Recommendations of the Hong Kong Association of Banks
To increase protection of credit card users, the HKAB studied rules in other jurisdictions, such as the Credit Card Accountability, Responsibility and Disclosure Act of 2009 in the United States. After the review, the HKAB issued recommendations to local credit card issuers, including the following:

  • At least 60 days' notice should be provided to customers before any change in fees.
  • Customers should not be charged fees for lack of account activity.
  • Billing statements should be sent to customers 21 days before payment due date.
  • Credit cards should not be issued to people under 18 who are without income and guarantor.
  • Card issuers need to post terms and conditions on their websites.
  • Card issuers should avoid "double-cycle billing," whereby interest charges are levied on balances from the date of the transaction. Interest charges should be imposed only from the date of the statement.
  • Card issuers should use "simple legal language" to explain terms and conditions to consumers.
  • Penalty fees, such as late payment charges, should be set at "reasonable" levels.

While the enforcement of the HKAB's recommendations is not mandatory, they provide best practice guidelines for credit card issuers.

To find out more about the HKAB's recommendations, click here.

The Code of Banking Practice – guidelines for credit card issuers
In 2001, the Code of Banking Practice was revised to increase protection of credit card users, including the following provisions:

  • Information on charges such as the annualized interest rates and yearly fees of credit card products must be provided to consumers to facilitate comparison.
  • The maximum liability for unauthorized transactions for credit card users should be HK$500, if cardholders have not acted with gross negligence or fraudulent intent and have informed card issuers about the loss or theft of their cards.
  • Holders of subsidiary credit cards should not be held liable for transactions made by primary cardholders or other subsidiary cardholders.

In 2009, the Code of Banking Practice was further updated, including requirements for credit card issuers to clarify information in marketing materials to consumers, and provide guidance to help customers enhance card security.

To see the Code of Banking Practice in its entirety, click here.

Supervision of credit card issuers in Hong Kong
The HKMA, as the main statutory body in Hong Kong responsible for maintaining the stability of the local financial system, assesses licensed institutions on their compliance with the Code of Banking Practice by requiring them to conduct regular audits of their operations, including divisions offering credit card services. The HKMA also works with the HKAB and the DTC Association (The Hong Kong Association of Restricted License Banks and Deposit-taking Companies) to draft revisions to the Code of Banking Practice.

Sources: The Hong Kong Association of Banks