Curbs on credit cards to be relaxed
Print Edition
CHINA’S central bank will relax curbs on credit card lending rates and raise the cash withdrawal limit in a bid to boost the market.
Effective next year, the People’s Bank of China will allow commercial banks to set interest rates on overdraft as low as 70 percent of the current rate of 0.05 percent a day, the PBOC said in a statement on its website yesterday.
The upper limit of the lending rate is 0.05 percent a day.
The PBOC will also increase the daily cash withdrawal limit from ATMs to 10,000 yuan (US$1,545) from the current 2,000 yuan.
The central bank will also scrap the requirement on interest-free period and the minimum monthly payment.
Currently, banks can offer as long as 60 days of interest-free period for card holders, and they have to pay at least 5 percent of their monthly bills.
Banks will have a greater leeway in fees they charge card holders if they fail to pay the bills on time.
The PBOC said the relaxation aims to improve services offered by credit card issuers, encourage market competition, and to develop a healthy credit card market.
Banks have to communicate the new terms to clients at least 45 days before changes take place, and the banks should register their lending rate, interest-free period and minimum monthly payment with the central bank at least 60 days before actual adjustment.
By the end of 2015, 390 million credit cards had been issued in China and their holders owed an outstanding 3.1 trillion yuan, official data showed.
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