Why credit card derating 

  Economic Daily · China Economic Net reporter Qian Qingni

  Recently, many banks have issued warnings: If personal credit card funds are used to buy houses and stocks, they will be derated, frozen, and locked. At the same time, some netizens also posted pictures of their deductions and card locks on social platforms-credit card deductions? Don't worry! A reporter from the Economic Daily will take you to find out.

  Recently, some credit card users have been derated or locked. In this regard, some people expressed their "anxiety": First, they do not understand why the bank is tightening credit card policies at this time; second, they are worried that a similar situation will happen to them someday. How to interpret it, the Economic Daily reporter interviewed industry professionals.

  Derating is intended to prevent and control risks

  "Derating credit cards is a consideration for banks to actively carry out risk prevention and control." Zeng Gang, deputy director of the National Finance and Development Laboratory, said that due to the impact of the new crown pneumonia epidemic, bad pressure on credit cards has increased. In addition, as the scope of bank credit investigation data expands, banks can also make a more comprehensive assessment of the true borrowing and credit status of customers. In this case, appropriate active derating is a means for banks to implement risk prevention and control.

  Not only that, analysis of announcements issued by many banks reveals that the active deduction is still to prevent credit card funds from flowing to other areas. For example, on August 11, the Everbright Bank Credit Card Center issued an announcement to clarify the use of credit card funds, that is, personal credit cards are only used by the cardholder for daily consumption, and credit card funds cannot be used for production and operation, fixed asset investment, equity investment, cash out, etc. Non-consumption areas, including house purchase, investment, financial management, stocks, other equity investments and prohibited areas, etc. China CITIC Bank Credit Card Center and Ping An Bank Credit Card Center also issued separate announcements recently, reminding that personal credit card overdrafts should be used in the consumer sector, and cardholders are not allowed to use any illegal or false purchases such as cash out, fraud, or malicious payment to withdraw bank credit funds and points , Rights, prizes or value-added services, etc.

  "Personal credit cards are used to meet personal daily consumption. An important way for banks to control credit card overdrafts is to control the use of funds. Personal credit cards are used to buy houses, stocks, or for production and operation, which is no longer a daily consumption. The use of funds is changed. This directly increases the related risks. Therefore, banks need to implement control on customers who use personal credit cards in violation of regulations.” said Lou Feipeng, a researcher at China Postal Savings Bank.

  In fact, in addition to being conscious, the factors that push banks to strengthen credit card risk prevention and control also stem from the continued high pressure on bank credit card business by the regulatory authorities this year. According to incomplete statistics, since the second half of this year, the China Banking and Insurance Regulatory Commission and its dispatched institutions have published a total of 16 punishment information disclosure forms, involving 6 banking institutions.

  In May, the China Banking and Insurance Regulatory Commission issued the "Notice on Carrying out the "Looking Back" Work on the Remediation of Market Disorders in the Banking and Insurance Industry", which also stated that in terms of credit card business, the main points of the "revising" work on chaos remediation include: failure to comply with regulatory requirements Make reasonable adjustments to personal credits such as housing mortgages and credit cards for people who temporarily lose their source of income due to the impact of the new crown pneumonia epidemic; credit card business inflates customer solvency or violates "rigid deductions" regulations, breaking through the upper limit of total credit limit control; cash advance The business quota is set too high, does not meet the requirements of prudent management, the use of funds is not well controlled, and the illegal flow to non-consumer areas; the installment business charges are not transparent, the quality and price are not consistent, and the legitimate rights and interests of consumers are violated.

  Regulate improper use of cards

  For credit card holders, what causes concern is whether the bank’s initiative to control credit card risks will affect them? In fact, people in the industry have stated that the regulation of cardholders' consumption behavior by banking institutions is only aimed at cardholders with improper use of cards, not all cardholders.

  In fact, on June 29, the Consumer Protection Bureau of the China Banking and Insurance Regulatory Commission issued a consumption reminder on the rational use of credit cards. It pointed out that in recent years, credit card business has developed rapidly and has become an important part of bank retail business. It has played an active role in promoting residents' consumption and facilitating residents' lives. However, problems in the use of credit cards have become increasingly prominent. According to some complaints and misunderstandings in the credit card business, the China Banking and Insurance Regulatory Commission issued the No. 4 risk reminder of 2020 to remind consumers: Correctly understand the functions of credit cards, use credit cards rationally, establish scientific consumption concepts, consume rationally, and moderate overdrafts.

  However, what if the cardholder is derated under normal use? Lou Feipeng said that in such a situation, he can learn about the specific situation from the card issuing bank through normal channels and protect his legitimate rights and interests. If the credit card is used in violation of the regulations and the deduction is caused, the violation should be stopped in time, and the bank should be cooperated with the bank to solve the problem if it causes adverse effects. Illegal use of credit cards may lead to personal credit card derating, payment stop, freezing, and card locking, and affect personal credit records. In severe cases, it may lead to violations of laws and crimes, requiring legal responsibility, and malicious overdraft behavior may require criminal responsibility.

  Zeng Gang said that from a personal perspective, personal use of credit cards should have a reasonable plan. “It’s not that the more money you borrow, the bigger the bank’s credit line, the better. Because finance is a “double-edged sword”. Good use of it can facilitate consumption, promote current consumption, and improve the quality of life; if you over-consume, it may It has an impact on the long-term development of an individual, beyond the ability to repay, will bring about undesirable consequences." Zeng Gang said.

  "Keep 4 unprinciples when using credit cards." The staff of the Bank Card Center of Hangzhou Bank said that one is not to overdraft maliciously, the other is not to participate in cash out, the third is not to use illegally, and the fourth is not to overspend. "Only by making reasonable plans, living within your means, and consuming rationally can you make your life better. On the other hand, if the overdue repayment is due to violations, it is included in the personal credit report, which is likely to cause future loans, going abroad, buying cars, and buying houses. Adverse effects."

  Big data to identify illegal cards

  Some people think, "Where exactly the cardholder uses the money, the bank doesn't know, as long as the money is paid back on time." Is this view right?

  In this regard, Zeng Gang said that the flow of credit card funds can be monitored. This is because credit card consumption mostly has transaction scenarios, and related risks can be controlled based on scenarios.

  "Customers' daily card use behavior is the bank's focus." Lou Feipeng said, specifically, banks can build models based on big data, and focus on abnormal card use. If personal credit cards are used for business or investment, timely measures must be taken. For customers with overdue or bad credit cards, it is necessary to strengthen collection management to stabilize the quality of bank assets.

  In fact, some bank staff said that due to the impact of the new crown pneumonia epidemic, this year all walks of life are exploring application scenarios such as online and big data. Banks have made greater progress in big data applications due to their early start of research and development and a strong accumulation of technology. The effective use of big data technology can help card issuers have a clearer understanding of cardholders’ consumption habits and capital flow, etc., thereby providing guarantee and support for credit card risk prevention and control. The system can also automatically warn of behaviors with high risk of violation.

  Lu Heying, vice president of the Credit Card Center of Agricultural Bank of China, said that they have established a comprehensive credit card risk control digital system by integrating system entrances, accelerating data introduction and application, expanding model coverage, and establishing target databases. At the same time, it uses intelligent anti-fraud, intelligent risk control and other platforms to carry out real-time monitoring of suspicious transactions, and applies facial recognition and other financial technologies to establish a remote transaction security authentication mechanism, timely checks early warning transactions, and timely collects and transmits fraudulent customer feedback. Risk event information.

  The Credit Card Center of China Construction Bank also stated that they have established three lines of defense against fraud based on the principle of the credit card life cycle and covering the entire process of business nodes: "pre-prevention, in-process control, and post-process". At the same time, through the establishment of a risk control system supported by model calculations, big data applications, and intelligent system decision-making, a number of risk tool models have been independently developed and deployed around the entire process of risk management, and risk control has been continuously optimized based on customer and scenario segmentation. Strategy and system functions.