MOST credit-card companies charge 2 per cent on rollover balance on a daily basis, if card holders do not pay the full amount on due date.

One intriguing piece of legislation I wish to draw attention to is the Moneylenders' Act.

The Act was passed to protect common people from unscrupulous moneylenders or loan sharks. The maximum interest rate a legal moneylender can charge a borrower on an unsecured loan is 18 per cent. And for only $1, the debtor can request a statement of his loan.

It is not the same with credit-card companies. Card holders have to pay a higher fee to print an old statement, if they lose their copy.

Credit-card companies also make a spread if card holders buy goods in foreign currencies. That spread is not favourable to card holders compared to the over-counter rate.

While moneylenders and credit-card companies are different service providers, they both primarily provide a credit service to the public. Of course, one difference of credit cards is that they are also convenient to use.

I applaud the recent decision by lawmakers in the United States to scrutinise credit-card companies on their interest rate charging practices.

Singapore lawmakers should also look at how credit-card companies charge their customers for card usage and the maximum interest payable. That goes for unsecured lines of credit.

Do remember to look closely at the fine-print terms and conditions on your credit cards and lines of credit. You may be in for a shock if you forget to pay on time.

Felix Ng

This article was first published in The Straits Times on January 19, 2009.