With consumer power and spending exploding, more credit cards are being swiped at payment machines in China. But meanwhile, consumers have more complaints about the trouble caused by credit cards. Recently, the Bankcard Special committee of China Banking Association revised China's Bank Card Industry Self-discipline Convention with new measures on the grace period of repayment and penalty interest, the two areas with most complaints. The new provisions will be implemented beginning July 1.
Zhang Wan has more.
The revised measures for China's bank card industry requires banks to keep cardholders informed about their credit card service details such as various fee rates and possible risks. And banks are required to remind cardholders at least three days before the repayment due date through bills, text messages, emails, phone calls or letters.
Meanwhile, the revised convention requires the banks to establish tolerance repayment mechanisms, as well as longer repayment grace periods. When cardholders repay the bills within three days after the due date, they should be regarded as repaid on time.
Cao Bin, department head with the Beijing branch of China Construction Bank explains.
"As for the new repayment grace period: if our client fails to repay the bill by the repayment due date, however, he completes his repayment in full within five days after due date, we'll still consider the repayment as being on time without any interest being charged. As for the tolerance repayment mechanism: when cardholders do not repay the full amount, and the portion due is less than or equal to 10 yuan, we'll also regard it as repaid on time, without any interest charge."
Previously, when any cardholder did not repay the bill in full ĘC for instance, he paid 99 yuan for a 100 yuan bill ĘC the bank calculated the interest rate based on his 100 yuan bill, rather than the one yuan he has yet to pay.
The new measures are solving this problem for cardholders. Many cardholders say it saves them lots of trouble.
"For example, when I get a bill of 310 yuan, I only pay back 300 yuan. And the unpaid 10 yuan amount will be automatically transferred to my next bill. It saves me the trouble of waiting in the long line at the bank when any miscalculation happens."
"Cardholders are allowed to repay within three days after the repayment due date, and they won't be regarded as late nor will it reflect badly on their credit record. I think this is good, and the new measures indicate the banks are being more considerate about cardholders. Plus the banks are providing more services such as reminding us about repayment due dates."
Some cardholders say the new measures will benefit young people most, because late payments mean a bad credit record when they apply for a loan from the bank the longer repayment grace period will help them avoid bad credit record.
Some experts say although these measures may affect the bank's interest income, but the development of the bank card business does not depend on the high interest penalties. Banks should focus on getting more customers by improving service and their expanding card volume.
Kevin Wang, associate director of Nielsen China, estimates that by the end of 2013, there will be 360 million credit cards in China. The pace of growth will slow.
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