The central bank announced that the credit card overdraft interest rate will be determined by the issuer and cardholders through independent negotiation to cancel the upper and lower limits of the


credit card overdraft interest rate

management

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　　Last week, 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", announcing that starting from January 1, 2021, the credit card overdraft interest rate will be determined by the issuer and cardholders through independent negotiation, and the credit card overdraft interest rate will be cancelled. Upper and lower limit management.

　　A reporter from the Beijing Youth Daily found that after a few days, the banks had not adjusted their credit card interest rate policies in accordance with the new regulations.

Many bank insiders told reporters from Beijing Youth Daily that they are seriously studying the new policy. Therefore, the credit card overdraft interest rate has not yet been adjusted, but it will always comply with the regulatory requirements.

　　New Deal

　　The central bank notified the cancellation of the upper and lower limits of credit card overdraft interest rates

　　On January 8, the central bank website published the "Notice of the People's Bank of China on Promoting the Market-oriented Reform of Credit Card Overdraft Interest Rates" (Yinfa [2020] No. 327).

According to the "Notice", 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 issuer and cardholder through independent negotiation, and the upper and lower limit management of credit card overdraft interest rates will be cancelled ( That is, the upper limit is five ten thousandths of the daily interest rate, and the lower limit is 0.7 times the daily interest rate five ten thousandths).

　　The “Notice” also requires that card issuers should fully disclose credit card overdraft interest rates through channels such as the institution’s official website and update them in a timely manner, and should prominently prompt credit card overdraft interest rates and methods of calculation and settlement in the credit card agreement to ensure that cardholders fully understand and Confirm acceptance.

When disclosing the interest rate of credit card overdrafts, the annualized interest rate should be displayed in an obvious way, not just the daily interest rate, daily repayment amount, etc.

　　Find

　　The daily interest rate of credit card overdraft is still mainstream

　　A reporter from Beijing Youth Daily checked the credit card contracts displayed on the official websites of ICBC, China Merchants Bank, China Construction Bank, Ping An and other banks, and found that there was no new content such as negotiation and determination with cardholders. The default overdraft interest rate is still five ten thousandths of a day. Some banks set the upper and lower limits of overdraft interest rates, which are also consistent with the previous regulations of the central bank.

　　For example, the ICBC Peony Card Requisition Contract stipulates: Party B will calculate the overdraft interest from the bank’s bookkeeping date for the transaction payments that Party A does not meet the interest-free conditions, and the overdraft interest rate is five ten thousandths of the daily interest rate (annualized interest rate is approximately 18.25%, Affected by factors such as different days in each month and different repayment status of Party A, the actual annualized interest rate may be different from the above-mentioned annualized interest rate), compound interest is calculated monthly and deducted from Party A’s account.

　　Ping An Bank’s credit card acquisition contract stipulates that if Party B repays the entire amount within the interest-free repayment period, it does not need to pay the interest of the current non-cash transaction.

Otherwise, all transactions do not enjoy the interest-free repayment period treatment, and the overdraft interest for all transactions from the date of accounting to the date of actual repayment shall be paid at five ten thousandths of the daily interest.

　　The contracts between China Merchants Bank and China Construction Bank set the upper and lower limits of credit card overdraft interest rates, both of which adopted the central bank's previous standards, but they all stated that there is no special agreement. The default interest rate is five ten thousandths of a day.

　　Response

　　Pricing adjustment may require a slower process

　　"We also received the notification formally only last week. The business department has initiated relevant policy research and it will take some time to make decisions." An insider of a joint-stock bank told a reporter from Beijing Youth Daily.

Many people in the industry believe that the adjustment of the overdraft interest rate directly affects the income of the credit card business, and banks will definitely treat it with caution and need time to study it carefully. In addition, past experience has shown that every move of bank charges will be strongly concerned by the market and "reckless action" It is likely to bring pressure from public opinion. Everyone is afraid of being a "prominent bird", so we temporarily choose to study and wait and see.

　　"On the whole, for C-end services such as credit cards, due to the limited single-account credit line, customers are more concerned about convenience, card use is more sticky, less sensitive to interest rates, and policies are not sufficient to drive credit card overdraft interest rates. Downward, pricing adjustment will be a slower process. At this stage, most banks are still implementing a daily interest rate of RMB 5,000 instead of discounting.” Wang Yifeng, chief banking analyst at Everbright Securities, believes that bank card overdraft interest rates after the opening of the policy There is a downward trend, but the policy impact is limited in the short term.

Photo courtesy/Visual China

　　analysis

　　Not many customers can use the overdraft interest rate

　　It is worth noting that even if the bank lowers the credit card overdraft interest rate in the future, not all credit card customers can enjoy this benefit.

It is understood that most bank credit cards have an interest-free period of more than 50 days, and customers who repay the full amount during the interest-free period do not have to pay interest at all; for customers who choose the installment service, the installment procedure of charging a fixed rate based on the number of installments applies The fee will be much lower than the overdraft interest rate.

Therefore, only cardholders who have not been able to repay in full during the interest-free period or have used the cash advance service need to use the overdraft interest rate.

　　Wang Yifeng also pointed out in the research report that credit card overdraft interest is mainly generated by the failure to repay the bill in full on time and credit card cash withdrawal, which is one of the important sources of bank credit card income.

According to his calculations, in the credit card business income structure, installment income, interest income and other income are roughly 4:4:2.

　　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.

　　Senior credit card expert Dong Zheng believes that the release of the "Notice" reflects the central bank's strong determination to reshape the position of credit card business in the consumer finance field, but objectively speaking, the marketization of credit card overdraft interest rates is only sufficient for the return of credit card business to the market. One of the conditions is that, after all, users who often resort to overdraft interest rates are still in the minority.

Whether the credit card business can use the "Notice" to regain its momentum and regain its lost market position and space depends more on the adjustment of the issuing bank's credit card business strategy with the times.

　　Dong Zheng also pointed out that the central bank's current policy adjustment is not aimed at Internet consumer financial products, but it will indeed have an impact on the consumer financial market by adjusting interest rates.

Earlier, Internet consumer financial products such as Huabei lowered the credit limit of some young users. The flexible pricing strategy of credit card institutions will help increase the attractiveness of credit cards to young customers.

　　Banks will not fight a bottomless "price war"

　　Since the central bank has cancelled the upper and lower limits of the overdraft interest rate, theoretically speaking, the overdraft interest rate negotiated by the bank and its customers may rise or fall.

However, industry insiders generally believe that the possibility of upward adjustment is very small, and the credit card overdraft interest rate should be a downward trend in the long run, but there will be no major "price war".

　　Xue Hongyan, deputy dean of the Suning Financial Research Institute, said that with the reduction of interest rates for various consumer loan products, credit card overdraft interest rates have gradually become a typical representative of high interest rates. After the restrictions are lifted, credit card overdraft interest rates are likely to go down.

"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 interest 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 overdrafts and good credit may receive more favorable overdraft interest rates.

After lifting the upper and lower limits, it is expected that the central bank will continue to guide banks to maintain a good competitive order through self-discipline mechanisms and other means, and banks will not fight a bottom-line "price war".

　　Dong Zheng also believes that there is no need to worry about the vicious decline in credit card overdraft interest rates.

Since bank funds are used at a cost, even if the card issuing bank sets prices in accordance with the market-based overdraft interest rate, it must also take into account the cost of funds and formulate a reasonable overdraft interest rate standard. It is believed that the industry-recognized pricing range standard will gradually form.

Therefore, if the upper and lower limits of credit card overdraft interest rates are relaxed, there will be no "cliff" ultra-low pricing standards for overdraft interest rates.

　　“It is possible that some people who have overdue card bonds think that they can set the overdraft interest rate on their own with the bank. This is also a misunderstanding.” Dong Zheng also pointed out that although the "Notice" liberalized the upper and lower limits on the overdraft interest rate, the overdraft interest rate should be priced. It is also implemented by the issuing bank through new products based on the positioning of different users, instead of adopting the one-person-one-negotiation pricing method.