The trouble with credit cards

The parents of a young man, who earns about 2,000 yuan ($317) a month and boasts 25 credit cards, had to sell their house to repay their son's debts. The youth's case shows that the own-a-credit-card campaign makes it convenient for people to possess a credit card, which can also create unexpected trouble, says an article in Xinmin Evening News. Excerpts:

When applying for a credit card, most people tend to focus on how much credit they will get, and neglect the amount of interest they will have to pay. In fact, bank clerks are obliged to warn customers about it, but only a few do so.

According to a recent People's Bank of China report, up to the first quarter of 2012, Chinese banks had issued 3.1 billion bank cards with an increasingly fast growth in overdrafts on credit cards.

Civil disputes and even criminal cases have been triggered by bank cards. Some banks play word games with obscure clauses, which seem to grant special favor to consumers but actually sow the seeds of potential trouble.

As their social responsibility, banks should conduct thorough and careful inspections of customers and cross-check the personal information provided by them. And they should evaluate the results carefully before issuing credit cards with appropriate overdrawing limits.

When receiving credit card-related business, it is obligatory for bank employees to give detailed explanations on customers with high default rates after the grace period.

A bank should also share the history of "bad" credit cards with other banks and strictly control the number of credit cards an individual can get from different banks to prevent overdrafts to non-payable limits.

(China Daily 09/25/2012 page9)