Exploring types of corporate credit card fees and how to minimise them

Why do you need to know your credit card fees and charges?

For any business, big or small, managing expenses effectively is crucial to maintaining financial health. One way to achieve this is by using corporate credit cards, which provide detailed transaction records, offer rewards and cashback, and empower your team to make purchases without the hassle of submitting employee claims.

However, corporate credit cards can also introduce unforeseen costs if not managed carefully. These costs, often small line items on a monthly statement, can quickly accumulate, eroding profits and straining budgets.

Understanding common credit card fees—such as annual charges, late payment penalties, and cash advance fees—enables your finance team to proactively avoid them. This knowledge transforms the corporate card from a potential financial burden into a valuable strategic tool.

By familiarising yourself with the different types of fees, you can make smarter decisions, compare offers across issuers, and choose a solution that fits your company’s spending habits and financial goals. Ultimately, taking control of your credit card usage and understanding the nuances of finance charges is a critical step towards stronger financial governance and long-term business success.

How credit card fees and charges are regulated in Hong Kong

In Hong Kong, the financial sector is known for its robust regulatory framework, and credit card issuance is no exception. The primary goal of these regulations is to ensure transparency and protect consumers and businesses from predatory or unclear practices. Several key bodies and ordinances govern how banks and financial institutions can apply fees and charges.

The Hong Kong Monetary Authority (HKMA), along with the Hong Kong Association of Banks (HKAB), jointly issues the Code of Banking Practice. This code sets out the minimum standards that authorised institutions are expected to follow in their dealings with customers. A core principle of the Code is fairness and transparency. It mandates that banks must:

• Provide clear information: Card issuers must provide customers with clear, concise, and easily understandable information about the key features and risks of their credit card products.
• Publish a tariff of fees: Banks are required to make a comprehensive schedule of their standard fees and charges readily available to the public. This includes details on annual fees, late payment charges, cash advance fees, and more.
• Issue a key facts statement (KFS): For every credit card product, the issuer must provide a KFS. This document summarises the most important information in a standardised format, allowing businesses to easily compare interest rates, fees, and key terms across different products. The Annualised Percentage Rate (APR), which represents the true cost of borrowing, must be prominently displayed¹.

Furthermore, the Unconscionable Contracts Ordinance (UCO) provides an additional layer of protection. If a court finds that a contract or any of its terms are "unconscionable" (unreasonably one-sided or oppressive), it can refuse to enforce the contract, strike down the unfair term, or modify it to be fair. This applies to credit card agreements where fees or penalty clauses are deemed excessively harsh².

These regulations empower businesses in Hong Kong to make informed financial decisions. By leveraging the mandated transparency, companies can meticulously review and compare credit card terms before committing, ensuring there are no hidden surprises down the line.

Understanding common credit card fees and charges

To effectively manage corporate credit card costs, it's essential to understand the specific fees that can be levied. While terms vary between issuers, the following are the most common charges you'll encounter.

Annual fee

An annual fee is a yearly charge that the card issuer levies for the privilege of using the card and accessing its associated benefits. The amount can vary dramatically, from zero for basic cards to several thousand Hong Kong dollars for premium cards that offer exclusive perks like airport lounge access, travel insurance, and dedicated concierge services³.

For businesses, the decision to pay an annual fee should be based on a cost-benefit analysis. If the value derived from the card's rewards program (e.g., cashback, air miles) and benefits significantly outweigh the fee, it can be a worthwhile investment. Many issuers also offer waivers on the annual fee for the first year or if the company meets a certain annual spending threshold.

Late payment fee

A late payment fee is a penalty charged if you fail to pay at least the minimum required amount by the statement due date. In Hong Kong, this is typically a fixed amount, often ranging from HK$250 to HK$400, or a percentage of the minimum payment due, whichever is higher⁴.

Beyond the immediate financial penalty, late payments can have more severe consequences. They're reported to credit bureaus, potentially damaging the company's credit profile. Furthermore, a late payment can trigger a "penalty APR," a much higher interest rate that can be applied to your existing and future balances, dramatically increasing the cost of any carried-over debt.

Cash advance fee

A cash advance allows you to withdraw cash from an ATM using your corporate credit card. While it may seem like a convenient way to access funds in a pinch, it's actually one of the most expensive types of credit card transactions.

Issuers charge an upfront cash advance fee, which is typically a percentage of the withdrawn amount (e.g. 3-5%) with a minimum charge. More importantly, unlike regular purchases, cash advances do not have an interest-free grace period. Interest begins to accrue from the very moment the cash is withdrawn, and the cash advance APR is almost always significantly higher than the standard purchase APR. For businesses, using a credit card for cash advances should be avoided at all costs⁴.

Balance transfer fee

A balance transfer involves moving outstanding debt from one credit card to another, usually to take advantage of a lower promotional interest rate (often 0% for a limited time). While this can be a strategic way to manage debt, it comes at a cost.

A balance transfer fee, typically ranging from 1% to 5% of the total amount being transferred, is charged upfront. Before proceeding, it's crucial to calculate whether the interest savings during the promotional period will be greater than the initial fee³.

Over credit limit fee

An over credit limit fee is charged if your outstanding balance, including new purchases, fees, and interest, exceeds your designated credit limit. In many jurisdictions, including Hong Kong, regulations often require cardholders to opt in to allow transactions that would push them over their limit. If you haven't opted in, the transaction will simply be declined. If you have opted in, the issuer can charge a fee for each billing cycle that your account remains over the limit. This fee serves as a penalty for using more credit than was allocated to your business⁴.

Foreign transaction fees

For companies that conduct business internationally, foreign transaction fees are a critical cost to consider. This fee is charged on any transaction made in a currency other than the card's billing currency (e.g., buying from an overseas supplier online or using the card while travelling abroad).

The fee is typically composed of two parts: a charge from the payment network (like Visa or Mastercard, usually around 1%) and a charge from the card-issuing bank (often an additional 1-2%). This results in a total fee of around 2-3% on top of every single foreign purchase, which can add up to a substantial amount for businesses with significant international spending⁵.

Interest charges

Interest, also known as a finance charge, is the cost of borrowing money from the card issuer. It is calculated using the Annual Percentage Rate (APR). Interest charges are applied to your account if you do not pay your entire statement balance in full by the due date⁵.

The interest-free period, or grace period, on purchases typically lasts from the end of a billing cycle until the payment due date. If you carry any portion of your balance past this date, you will be charged interest on the remaining amount. The APR can vary significantly based on the card type and the company's creditworthiness. It's crucial to note that different APRs often apply to different types of transactions, with purchases having the lowest rate and cash advances having the highest.

Tips to minimise credit card fees and charges

Avoiding fees isn't about avoiding credit cards; it's about using them strategically. By adopting disciplined financial habits, your business can unlock the benefits of corporate cards while keeping costs to a minimum⁶.

1. Making timely payment

This is the single most effective way to avoid unnecessary fees. Paying your bill late results in a late payment fee and can trigger a high penalty APR. To ensure this never happens:

• Set up autopay: Arrange for automatic payments from your company's bank account. You can choose to pay the full statement balance or the minimum amount due.
• Create calendar alerts: Set multiple reminders in your digital calendar a few days before the payment due date.

2. Understanding credit card terms

Before signing any agreement, you must thoroughly read the terms and conditions and pay close attention to the Key Facts Statement (KFS). Make sure you're fully aware of:

• The annual fee and any waiver conditions.
• The APR for purchases, cash advances, and balance transfers.
• The amount for late payment, over-limit, and cash advance fees.
• The length of the interest-free grace period.

Knowing these details empowers you to use the card in the most cost-effective way.

3. Choosing cards with no foreign transaction fees

If your business involves international travel, overseas clients, or purchasing goods and services from foreign vendors, an FX fee of 2-3% on every transaction can become a major expense. Actively seek out corporate credit cards that explicitly advertise no foreign transaction fees. The savings over the course of a year can be substantial and can easily justify a higher annual fee if one is required.

4. Maximising interest-free period

The grace period is essentially a short-term, interest-free loan from your card issuer. To take full advantage of it, make it a standard practice to pay your statement balance in full every single month. By clearing your balance before the due date, you will never pay a cent in interest charges on your purchases. This is one of the most fundamental principles of effective credit card management for any business.

5. Monitoring your account activity

Regularly review your credit card statements and online account portal. This habit helps you:

• Track spending: Ensure spending stays within budget and below the credit limit.
• Detect fraud: Quickly identify and report any unauthorised transactions.
• Verify charges: Confirm that all fees and charges are accurate according to your cardholder agreement.

Using the issuer's mobile app can provide real-time alerts for transactions and payment due dates, adding another layer of control.

Introducing Aspire Corporate Cards, a smarter alternative to traditional corporate cards

While diligently following these tips helps manage costs with traditional credit cards, the most effective strategy is to choose a card designed to minimise or eliminate these fees from the start. Aspire's Corporate Cards offer a smarter alternative, giving your business greater flexibility without unnecessary fees and charges.

Aspire Corporate Cards are available as both virtual and physical debit cards, giving your team the flexibility to spend while helping your business cut costs.

With Aspire, you can issue unlimited cards at no extra cost. Each card can be customised with spending limits and assigned to specific merchants, clients, or projects—helping you prevent fraud and unauthorised expenses. All this comes with zero annual or subscription fees.

You can also spend directly in USD to avoid conversion fees on international purchases, while earning 1% cashback on digital spend. Plus, the cards integrate seamlessly with Hong Kong’s digital payment ecosystem.

For complete visibility, Aspire gives you a centralised dashboard to track and monitor every transaction in real time. Designed for both local and global use, Aspire Corporate Cards provide the agility modern businesses need to operate efficiently across borders.