Pinoy in Singapore

Here’s another reason you should watch your credit card bills closely.

Aside from making sure you are not paying for fraudulent charges made on your card, you should also take a look at the finance charges you are being charged with.

I usually pay my credit card bills in full so that I don’t pay finance charges.  I pay them online through BPI Expressonline.  But due to my own carelessness, I mistakenly paid my HSBC bill to my BPI card.   It was a scheduled payment but I only noticed the mistake after the payment was made.

The first thing I did of course was to call BPI and ask them for my money back which they returned a few days later.  Thank you, BPI.  The next thing I did was find out the rate of finance charge  – 3.5%.  When I was in college, I thought that 3.5% was applied to the balance after you’ve made the payment but actually that interest charge is applied to the outstanding balance before your payment.  So if you have left even 1 cent on your balance you would be charged interest based on your previous balance.

Up till recently, I thought that was all there is to it – until my booboo.

Here is my bill for this month:

My opening balance is P31533.65  Good thing I made a partial payment otherwise I would have paid late charges too.  Based on the bill, the finance charge is P2132.13.  So I thought, hmm 3.5% of P31533.65 should be much less than that.  To be exact, it should be only P1103.68.  So I called HSBC (yeah, it’s an overseas call with overseas charges) to find out what’s up.

According to the agent I talked to.  The formula is much more complicated.  I didn’t quite catch the formula but I vaguely remember it’s a function of the average balance per month, number of days in the billing cycle etc.  Well whatever it was it amounted to P2132.13 – or 6.76%!  That’s 81.12% a year!  And that is not detailed anywhere in the bill.  So if I hadn’t noticed, and hadn’t asked, I would’ve no idea.  I did ask the agent for the formula and she told she was going to fax it to me.  But I called up our house and they didn’t get any fax from HSBC.

So if you’re still leaving a balance on your credit card bill, you better think twice.  The finance charges can be pretty exorbitant.

Is it even legal?  Isn’t this protected by a consumer law or something?