Credit card maximum balance interest clause doubted in China
Recently the way of penalty interest calculation on credit card has aroused wide criticism in China. Through media reports, many Chinese individual credit card clients are astonished to learn that the penalty interest because of late repayment is calculated based on maximum balance. In another word, one owes RMB 10,000 credit card debt, on the due day he repays RMB 9,999. Then the penalty interest will be calculated based on the maximum balance, i..e. RMB 10,000 until he totally repay all the outstanding amount. Under pressure, the recent new revision of the “self-discipline” in the banking industry has requested the banks to offer three days as grace period as well as “no full penalty” if the remaining balance to be repaid on the due day is less than RMB 10. But people are still not really happy with such changes as they are not touching the foundation of the credit card maximum balance interest clause in China. Many believe that earning money is the true intention of credit card banks’ decline to cancel the seemingly unreasonable clause, news pointed out that such penalty interest account for 40% to 50% of the revenue of credit card sector in China which is truly high compared to the digit found in the United States (8%).