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It's about 700 million cardholders! Cancellation of credit card overdraft interest rate restrictions
2021-01-11

Bank credit card interest rates were loosened, and the central bank released the upper and lower limits of credit card overdraft interest rates.


Recently, the Central Bank issued the "Notice of the People's Bank of China on Promoting the Market-oriented Reform of Credit Card Overdraft Interest Rates" (hereinafter referred to as the "Notice") to branches, state-owned banks, and joint-stock banks. The content shows that, in order to further promote the reform of interest rate marketization, the People's Bank of China has decided that starting from January 1, 2021, the credit card overdraft interest rate will be determined by the card issuer and the cardholder through independent negotiation, and the upper and lower limit management of the credit card overdraft interest rate (ie the upper limit) will be cancelled. The daily interest rate is five ten thousandths, and the lower limit is 0.7 times the daily interest rate five ten thousandths).


For a while in the market, some believe that this will benefit banks with strong credit cards, and some believe that it will have an impact on Huabei and consumer finance.


The notice requires that the card issuer shall fully disclose the credit card overdraft interest rate and update it in a timely manner through the official website of the institution and other channels, and shall prominently prompt the credit card overdraft interest rate and the method of calculation and settlement in the credit card agreement to ensure that the cardholder is fully aware of and confirms acceptance. When disclosing the credit card overdraft interest rate, the annualized interest rate should be displayed in an obvious way, not only the daily interest rate, daily repayment amount, etc.


The credit card overdraft interest rate has been changed to independent negotiation pricing, which reflects the direction and principle of interest rate marketization. The "Commercial Bank Law (Revised Draft)" issued last year proposed that the current "Commercial Bank Law" stipulates that: "Commercial banks shall determine the loan interest rate in accordance with the upper and lower limits of the loan interest rate set by the People's Bank of China." According to the relevant regulations of the People's Bank of China, the interest rates of deposits and loans can be determined through independent negotiation with customers.


In fact, the central bank's market-oriented reform of credit card overdraft interest rates began a few years ago.


Regulations on the management of the upper and lower limit of credit card overdraft interest rates can be traced back to the "Notice on Matters Concerning Credit Card Business" issued by the Central Bank on April 15, 2016, canceling the previously unified standard for credit card overdraft interest rates, and implementing the upper and lower limits of overdraft interest rates. For management, the upper limit is the current standard daily rate of overdraft interest rate of 5%, and the lower limit is 30% on the basis of the daily interest rate of 5%. The notice will be implemented on January 1, 2017.


At that time, the person in charge of the central bank said that setting upper and lower limits on credit card interest rates will help card issuers accumulate pricing data and experience, and establish a sound credit card interest rate pricing and operation management mechanism.


According to data from the Central Bank, as of the end of the third quarter of 2020, the number of bank cards in use nationwide was 8.798 billion, an increase of 1.62% from the previous quarter, and the growth rate increased by 0.11 percentage points from the end of the previous quarter. Among them, the number of debit cards in use was 8.033 billion, a month-on-month increase of 1.66%; the number of credit cards and debit cards in use was 766 million, a month-on-month increase of 1.29%. The country has 6.28 bank cards per capita, of which 0.55 are credit cards and debit cards per capita.


In 2020, the overdue rate of credit cards has increased. As of the end of the third quarter, the proportion of credit cards overdue for half a year accounted for 1.17%, an increase of 0.03 percentage points from the second quarter and an increase of 0.19 percentage points from the end of the previous year. 1.17% of the credit balance.


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