According to Xinhua News Agency, Beijing, January 12 (Reporter Wu Yu) Recently, the People's Bank of China issued a document to cancel the upper and lower limit management of credit card overdraft interest rates, which has aroused consumers' attention.
What impact will the "relaxation" of credit card overdraft interest rates have on our lives?
What changes will it bring to the credit card industry?
Credit card overdraft interest rates are "relaxed"
The central bank recently issued a notice stating that starting from January 1, 2021, the upper and lower limit management of credit card overdraft interest rates will be cancelled.
This means that starting this year, the credit card overdraft interest rate can be determined through independent negotiation between the card issuer and the cardholder.
So far, many consumers who often use credit cards to "buy, buy, and buy" have only noticed that credit card overdraft interest rates originally had upper and lower limits.
In fact, relevant reforms have already begun.
In the early years, all bank credit card overdraft interest rates also used a fixed interest rate-a daily interest rate of five ten thousandths.
In 2016, the Central Bank issued a notice that starting from January 1, 2017, the upper and lower limits of credit card overdraft interest rates will be implemented. The upper limit is five ten thousandths of a daily interest rate, and the lower limit is 0.7 times the daily interest rate of five ten thousandths. Equivalent to an annualized interest rate of 12.6% to 18%.
After a lapse of 4 years, the management of credit card overdraft interest rates has been "relaxed". What are the considerations?
"In order to further promote the reform of interest rate marketization"-the central bank's notice only has this short explanation, but there is a deep meaning behind it.
In recent years, the credit card market has developed day by day, and the risk management system has been gradually improved. The conditions for promoting the marketization of credit card interest rates have basically matured.
In addition, the current pricing benchmark conversion for newly issued and existing loans has been successfully completed, and further promotion of interest rate reform in the credit card market is a matter of course.
Quality customers may get more discounts
If the lower limit on interest rates is released, will credit card overdraft rates drop significantly?
Industry insiders pointed out that after the market-based pricing of overdraft rates, banks need to make reasonable pricing and adjust the overdraft rates based on capital costs, credit resources, market strategies, and risk preferences.
"Currently, many banks have adopted an upper limit for credit card overdraft interest rates, which is five out of ten thousand. Some small and medium-sized banks offer discounts, but few have a lower limit." Dong Ximiao, chief researcher of China Merchants Union Finance, said that the lower limit was released It does not mean that the overdraft rate will soon fall below the original lower limit.
However, in the future, credit card overdraft interest rates will be more differentiated. Customers with high frequency and amount of overdraft and good credit may get more favorable overdraft interest rates.
It is worth noting that overdraft interest rates and installment fees are not the same thing.
"I just bought a computer in installments with a credit card, and the policy has been adjusted. Am I losing money?" Ms. Wang of Beijing City wondered.
In this regard, experts said that this adjustment is the credit card overdraft interest rate, which is different from the installment fee and will not affect the installment repayment.
In addition, the notice also stipulates that when disclosing the interest rate of credit card overdrafts, the annualized interest rate should be displayed in an obvious way, not only the daily interest rate, daily repayment amount, etc.
A person from a large state-owned credit card center said that the daily interest rate of five ten thousandths may not seem to be much, but the annualized interest rate is 18%, which is not cheap.
"In accordance with regulatory requirements, card issuers must fully disclose credit card overdraft rates and update them in a timely manner to ensure that cardholders are fully aware of and confirm their acceptance, which is conducive to safeguarding the legitimate rights and interests of cardholders."
Cardholders should borrow and spend rationally
At present, my country's consumer finance market has a large number of participating institutions and rapid development. Internet consumer finance products such as Huabei and JD Baitiao continue to make efforts. The challenges facing bank credit cards are self-evident.
According to data from the Central Bank, as of the end of the third quarter of 2020, the number of credit card and lending card in use in my country totaled 766 million, an increase of 1.29% from the previous quarter.
The total amount of bank card credit was 18.59 trillion yuan, an increase of 3.80% from the previous month.
Industry insiders pointed out that the abolition of the upper and lower limit of credit card overdraft interest rate management will facilitate independent decision-making by card issuers, provide cardholders with personalized services, and increase their attractiveness in competition with other consumer financial institutions, especially Internet financial platforms.
However, experts reminded that although card issuers will make efforts to expand their customer base and introduce preferential interest rates for some high-quality customers, cardholders should fully analyze their repayment ability and borrow and consume rationally.