A few days ago, the China Banking Regulatory Commission issued the Measures for the Administration of Pilot Consumer Finance Companies, and will launch pilot consumer finance companies in Beijing, Tianjin and Shanghai in the near future. It is reported that the above four places will set up professional consumer finance companies to provide consumer loans to the public to promote consumption and stimulate domestic demand. This news immediately attracted the market to compare the traditional personal consumption loans, credit card loans and the businesses of consumer finance companies. Some people think that the loan interest rate and convenience of consumer finance companies are better than bank credit cards. But this is not the case. Consumer finance is also usury. Credit cards have been criticized for charging interest since they became popular in China. According to conservative public opinion, it is undoubtedly the "crime of usury under the sun" in modern society that the daily interest rate of a credit card is five ten thousandths, and the annual interest rate is more than 18% with monthly compound interest. In addition, domestic banks mostly use the interest-bearing method of "partial repayment and full interest" for credit card arrears-even if the cardholder returns part of the arrears, the bank still calculates the interest according to the full amount of the arrears (domestic banks implement this interest-bearing method except ICBC). Therefore, once the cardholder's credit card debt is overdue or caught in the quagmire of circulating credit, the expansion rate of credit card debt interest is amazing. In the first half of 2009, domestic credit card bad debts rose, and a considerable number of cases were that cardholders could not turn around in the cycle of "minimum repayment amount" for various reasons. To be sure, without the support of savings deposit business, the interest rate of personal loans of consumer finance companies in the future will inevitably be higher than the market average interest rate. This can be proved by the market conditions of commercial credit companies in overseas mature markets (the interest rate of consumer credit companies in Chinese mainland and Hongkong is 20% higher than that of banks, while that of Taiwan Province Province in China is 30%). Moreover, due to the lack of account services and network support, the convenience for investors to apply for personal loans from consumer finance companies is not necessarily better than credit card loans. Although the credit card market in China is still an immature emerging market, at present, there are many ways to avoid the "usury" of revolving credit. The first trick: the first way to pay by installment is to pay by installment, which has developed rapidly in recent years. Simply put, the credit card installment launched by domestic banks is mainly divided into "designated consumption installment" and "unlimited consumption installment". These two installment methods are free of overdraft interest under the condition that the cardholder repays normally on a monthly basis. "Designated Consumption Installment" refers to the installment payment for shopping in cooperation between a bank and a specific merchant, and the cardholder can choose the goods of the specific merchant or online mall of the bank according to the relevant announcement of the bank. This installment payment method generally only requires cardholders to pay a lower handling fee (generally 2%~3%). Some banks have no handling fee for this installment service, but the price of goods may be "slightly higher". Among all kinds of installment services for designated consumption, it is suggested that cardholders in need should mainly buy cars by installment. China Merchants Bank, China Construction Bank and Minsheng three card-issuing banks have carried out credit card installment payment business with many domestic mainstream automobile brands, and due to the agreement between banks and automobile manufacturers, the installment payment fee rate of some models is far lower than the benchmark loan interest rate for the same period. For example, the installment fee for credit card car purchase of China Merchants Bank, China Construction Bank and Minsheng is about 2%~3.5% for one year and 7% for two years, and some models are even interest-free. In this sense, using credit card to pay for car installment payment is superior to traditional car loans in convenience. As for the way of "unlimited consumption by stages", different banks have different "stage names": bill DIY, everything, easy purchase by stages and so on. This staging method is no longer strictly limited to shopping malls and commodities (but most banks are limited to general retail consumption). After the bill is generated or a large transaction is completed, the cardholder calls the issuing bank to apply for the number of installments (3-24 months). On the installment object, some banks can installment all the consumption of the cardholder's statement in the current month, while others mainly installment the cardholder's large single consumption. Under normal circumstances, with the increase of the cardholder's payment period, the handling fee will increase accordingly. However, some banks adopt the pricing strategy of grading according to the amount and fixing the monthly fee rate (see table). According to the service fee rate announced by the bank, the annualized service fee for "unlimited consumption installment payment" is at least 6% (China Everbright Bank and Huaxia Bank) and at most 8.4% (Bank of Beijing), which is higher than the current one-year loan interest rate (5.3 1%), but far lower than the credit card revolving credit rate. Whether it is monthly bill installment or single large consumption installment, it is the best alternative to the minimum repayment amount of credit card. The second trick: the second way of card outsourcing is the "card outsourcing" that has been questioned by the media-that is, the credit card limit is converted into a general loan, which is essentially a personal credit microfinance, and it is still in the market testing stage. Domestic card-issuing banks have already launched this service, such as Shanghai Pudong Development Bank (universal fund), China Guangfa Bank (financial intelligence), China Construction Bank (cash installment) and Huaxia Bank (Yidajin). In terms of specific use, after the cardholder is "invited" or actively calls the issuing bank to apply successfully, the bank will transfer the funds within the credit card limit to the cardholder's debit card account (other banks can also use debit cards), and then the monthly repayment amount and handling fee will appear in the cardholder's credit card bill. The installment fee for transferring credit card amount to general loan also depends on the number of periods of the cardholder. The one-year annualized interest rate is about 7%~9%, which is more than 25% higher than the current one-year loan benchmark interest rate, but still far lower than the credit card revolving credit rate. The third measure: "balance compensation" The third way is "balance compensation"-that is, using the credit card of Bank A to repay the credit card account of Bank B at a lower interest rate. The domestic credit card market was first launched by Huaxia Bank in 2007. According to the cardholder's application, the bank can pay the credit card arrears of other banks through the cardholder's descendants. At the same time, the transfer repayment will be converted into six-month interest-free installment payment in the bank's credit card, and the cardholder will be charged a one-time service fee of 2%. The disadvantages of balance compensation are also obvious: it is easy to cause cardholders with poor self-control ability to spend freely and their debts are getting higher and higher. The vicious circle of differential compensation can be said to be an important reason for the "debt storm" in Taiwan Province Province. Avoiding the "high interest rate" of credit cards, effectively reducing the burden on cardholders and cultivating a rational credit consumption culture are also conducive to the sustainable development of the credit card market. Undoubtedly, the current installment rate of credit cards still has room for decline, and the relevant competition is not sufficient-some banks have not yet entered the business fields such as installment payment and off-card lending. The development of these businesses can also accumulate experience for new businesses such as consumer finance companies. At a time when the domestic economy is heavily dependent on expanding domestic demand, regulators and card-issuing banks can take this low interest rate cycle as an opportunity to take credit card interest rates, installment fees and other rates as interest rate marketization pilots and try to personalize interest rates and rates: credit card overdraft interest rates and installment rates vary from person to person and dynamically adjust. This will not only enable the issuing bank to make full use of the price differentiation strategy to carry out "intensive cultivation" customer segmentation; It can also help cardholders to cultivate their loyalty to the issuing bank and cherish their personal credit records.