For frequent travelers between Hong Kong and Mainland China, bringing along a credit card that enables one to spend and pay in both Hong Kong Dollars and Renminbi saves consumers the trouble of carrying large amount of cash as well as money changing.
Dual Currency Credit Cards
A survey by the Consumer Council has looked into 8 dual currency credit cards issued by 7 credit card companies, of which the purchases made in Hong Kong and Mainland China are listed in separate accounts of local and Mainland currency in the same statement, to be settled in respective currencies.
All credit cards in the study offer an annual fee waiver, for the first 2 to 5 years with some card types offering permanent annual fee waiver. 7 of these credit cards (6 credit card issuers) carry a cancellation policy, which means new card holders will be charged an administrative fee or a fee equivalent to the value of the welcome gift redeemed, ranging from HK$300 to HK$800, should they terminate the principal card within 12 to 18 months.
The study reveals that the borrowing costs for dual currency cardholders can be very expensive. The interest rate of retail purchase between the cards can vary from the annualized percentage rate (APR) of 16.08% to 34.49%, the highest being twice as much as the lowest.
All but one of these credit cards share the same interest rate for spending made in Hong Kong Dollars and Renminbi: there is a difference of 3.78% to 9.47% between the Hong Kong Dollar account (16.08% to 29.33%) and Renminbi account (19.86%).
If one needs to take out a cash advance in Renminbi, the rate is by no means cheap. Different credit cards impose an APR from 20.53% to 37.52% plus a handling fee ranging from 3% to 4% of the loan. The rate for cash advance in Hong Kong Dollars varies from 22.98% APR to 36.76%.
Consumers may face hefty interest rates as high as over 40% per annum if they fail to pay on time. The interest rates for late payment on card spending of retail purchase vary from 16.08% to 42.58%; and 20.53% to 43.95% on cash advances.
Other than the card spending in Hong Kong and China, the dual-currency card can also be used overseas.
Of the 8 credit cards surveyed, only one credit card of Visa payment system carries a 1.9% foreign currency transaction charge while the remaining cards of China Union Pay network waive such charges.
But consumers should note that the date for converting the overseas transactions amounts may not be the same day when they signed for the payment, depending on the payment network to which the credit card belongs.
China Union Pay will post the transaction as at the day when the consumer signed for the transaction, while Visa will process the transaction upon submission of the transaction record by the merchants' receiving banks.
If post date is different from the date of transaction, consumers will only be able to know the actual conversion date and rate details upon receipt of the card statement.
During times of market volatility and currency fluctuations, consumers may have to face unfavourable exchange rate. Consumers can contact the card issuer or check the website of the international card organisation to find out the exchange rate at the date when foreign currency amounts are converted to Hong Kong Dollars.
As cardholders may prefer to earn rewards on their purchases, the study finds that all dual-currency credit cards give users either cash rebate or bonus points. 3 card issuers offer a cash rebate ranging between 0.4% to 0.5%, but some of them may pay the cash rebates for Renminbi account in Hong Kong Dollars instead of Renminbi.
Renminbi Credit Cards
Meanwhile, the Consumer Council had also surveyed 6 Renminbi credit cards, which can only be used on the Mainland.
All of them provide an annual fee waiver, for the first 1 to 3 years, with the majority (5 Renminbi credit cards) carrying a lending rate of APR exceeding 30%. Consumers who defaulted on the minimum payment of retail purchase or cash advance payment may face up to a maximum of APR 42.58% and 44.73% respectively.
Consumers are cautioned to check with the card issuer or international card organisation ahead of their journey the region or companies at which the card will be accepted, or they may consider carrying a couple of cards in the wallet to ensure flexibility.
In case of card loss in Mainland China, card owners should report to card centre immediately, instead of reporting to the Mainland bank or the Mainland branch of Hong Kong banks.
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