The central bank recently issued the "Notice of the People's Bank of China on Promoting the Market-oriented Reform of Credit Card Overdraft Interest Rates". Starting from January 1, 2021, credit card overdraft interest rates will be determined independently by card issuers and cardholders through independent negotiations. Cancel the upper and lower limit management of credit card overdraft interest rates. Starting from January 1, 2017, the central bank has implemented an upper and lower limit range management for credit card overdraft interest rates. The upper limit is 0.5% of the daily interest rate, and the lower limit is 0.7 times the daily interest rate of 0.5%. The cancellation of the upper and lower range management this time is considered to be a further step in the marketization of credit card interest rates.

my country used to strictly control interest rates, and officially launched the marketization of interest rates in my country in 1993. The purpose was to further straighten out the relationship between deposit interest rates, loan interest rates and securities interest rates; and gradually formed a central bank Market interest rate system based on interest rates.

my country’s interest rate marketization process follows the general idea of ??“foreign currency first, then local currency; loans first, then deposits; long-term, large-amount, then short-term, small-amount”, which can be roughly divided into three types. Stages: In the first stage from 1993 to 1999, the liberalization of money market interest rates was implemented, and loan interest rates began to rise. In the second stage, from 1999 to 2013, loan interest rates were completely liberalized and deposit interest rates began to float; the central bank began to steadily expand the floating range of deposit and loan interest rates, and finally in October 2004, the central bank completely liberalized the upper limit of RMB loan interest rates for financial institutions; in July 2013 In September, controls on loan interest rates of financial institutions were fully liberalized, and loan interest rates were fully market-oriented. In the third stage, deposit interest rates have been completely liberalized since 2014. In November 2014, the upper limit of the floating range of deposit interest rates was adjusted to 1.2 times the benchmark interest rate. In 2015, it was raised to 1.3 times and 1.5 times. On October 24, 2015, the central bank decided to Banks and rural cooperative financial institutions will no longer set floating ceilings on deposit interest rates. At this point, China's interest rate marketization process has been basically completed in form.

However, after the marketization of deposit interest rates and loan interest rates, there is still a blind spot in the marketization of interest rates, that is, there are still restrictions on credit card overdraft interest rates. The 1999 "Bank Card Business Management Measures" clearly stipulates: "Compound interest on credit card overdrafts is calculated on a monthly basis, and the overdraft interest rate is 0.05% of the daily interest rate." The "Notice of the People's Bank of China on Matters Related to the Credit Card Business" issued in 2017 clearly implements the management of the upper and lower limit ranges of credit card overdraft interest rates, and stipulates that "the upper limit of the overdraft interest rate is 5/10,000 of the daily interest rate, and the lower limit of the overdraft interest rate is 0.01/10,000 of the daily interest rate." 0.7 times five". This time 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". Starting from January 1, 2021, credit card overdraft interest rates will be determined independently by card issuers and cardholders through independent negotiation, and the upper limit and credit card overdraft interest rate will be cancelled. Lower limit management. This marks the complete marketization of my country's interest rate factor market.

However, while the credit card overdraft interest rates are being marketized, we are faced with a huge problem, that is, how to implement the overdraft interest rates that have been formed before? Should we continue to implement the previous interest rate level or implement the agreed interest rate that has been re-signed? This is a problem for the 700 million credit card users, and it is also a test for the card-issuing banks.

The second big problem is, will the cancellation of upper and lower limit management of credit card overdraft interest rates really lead to a downward trend in credit card overdraft interest rates?

After years of development, my country’s credit card market has formed a very large scale. According to statistics from the central bank, as of the end of the third quarter of 2020, the number of bank cards in use across the country was 8.798 billion, of which a total of 766 million credit cards and debit and credit cards were in use. More importantly, as of the end of the third quarter of 2020, the total outstanding credit card credit card overdue for half a year was 90.663 billion yuan, a month-on-month increase of 6.13%, accounting for 1.17% of the credit card payable balance.

The introduction of this policy means that more than 700 million credit cards in my country will have the upper and lower limits of overdraft interest rates removed. At the same time, the total outstanding credit of 90.663 billion yuan that is overdue for six months will face the risk and possibility of repricing. sex.

Many people will believe that canceling the upper and lower limits of credit card overdraft interest rates will help banks lower credit card overdraft interest rates and guide credit card overdraft interest rates to move downwards with a high probability. At the same time, due to the increased room for bank price competition , banks can carry out differentiated pricing for different customer groups, and customers may get better interest rate concessions. The reality may be just the opposite. Credit cards and low-interest consumer loans are not a competitive scene in themselves. Credit cards have user advantages and scene advantages, which are competition for sub-optimal customers in consumer credit, while consumer credit is a competition for high-quality customers. This is This determines the stickiness of credit card overdraft customers. At the same time, due to over-reliance on credit card overdraft consumption, there is a lack of flexibility and sensitivity to credit card overdraft interest rates, but is only sensitive to the size of the credit card limit, which may lead to further increases in credit card overdraft interest rates. rising.

The occurrence of card-keeping, overdraft consumption and cash-out behaviors in reality is undoubtedly the result of insensitivity to credit card overdraft interest rates, and the large number of credit card installments shows that it is impossible for banks to further reduce interest rates on credit cards . This is not only determined by the customer group, but also the problems and functions of bank credit cards. This is a very big contradiction and a very cruel social reality.

From 2002 to 2018, China's bank card market has experienced a stage of rapid development, with the average annual compound growth rate of transaction volume and number of transactions in the bank card market exceeding 35%. But at the same time, we have also experienced three major changes, and each change has restrained excessive overdraft behavior.

The first change was to strengthen the management of the overall credit limit of credit cards in 2011, but it was not really standardized until these two years. The current regulations on credit cards with multiple cards per person and large credit limits are the result of this policy. Article 15 of the China Banking Regulatory Commission's Document No. 2 of 2011 "Measures for the Supervision and Administration of Credit Card Business of Commercial Banks" clearly stipulates that card-issuing banks must strengthen the management of the overall credit limit of credit cards and shall monitor the credit limits and installments of multiple credit card accounts in the name of the cardholder. The overall payment credit limit, supplementary card credit limit, cash withdrawal credit limit, etc. are consolidated and managed, and the upper limit of the total credit limit is set. However, in reality, there are still many situations where one person has multiple cards and excessive credit. On May 28, 2019, a paralegal in Zhuhai, Guangdong had a monthly salary of only more than 3,000 yuan, but he had 14 credit cards under his name, with a credit limit of more than 770,000, and a total credit card debt of More than 878,000 yuan.

The second change in bank credit card situation: Strictly manage the arbitrage behavior of credit cards, especially the use of cards to support cards. In 2017, the China Banking Regulatory Commission issued the "Notice of the General Office of the China Banking Regulatory Commission on Strengthening the Risk Management of Credit Card Cash Advance Business" (CBRC Banfa [2017] No. 49). The most important one is to adjust the repayment policy for credit card cash withdrawals and tighten control. . The cost of maintaining a card is very high. In fact, there is an annual cash withdrawal cost of nearly 18%. Cash withdrawals completed through cash withdrawal service agencies require a one-time payment of between 1% and 2%. If the operation is performed once a month The annual cash-out service fee reaches 12-24%.

For the third time, the bank credit card situation has changed. On November 18, 2019, China UnionPay issued the "Notice on Carrying out Special Standards for the Repayment of Credit Card Violations by Acquiring Institutions", requiring acquiring institutions to cooperate with outsourcing service agencies , merchant management, transaction monitoring and other aspects to comprehensively check whether there is any illegal credit card return business. If any illegal credit card return business is discovered, it should be shut down immediately. As of the end of 2017, the domestic credit card balance compensation market size was about 32.3 billion yuan, and the cost of credit card compensation is much higher than the interest rate cost of overdrafts.

As can be seen from the above, credit card overdraft interest rates are not the most important way for banks to compete for credit cards, and credit card overdraft customers are not sensitive to the level of credit card overdraft interest rates. When the cap on credit card overdraft interest rates is cancelled, Whether it will drive up or even significantly increase credit card overdraft interest rates is a very difficult guess.

The third major problem is to cancel the upper and lower limit management of credit card overdraft interest rates. How to solve the conflict between credit card overdraft interest rates and usurious interest rates?

Many people mistakenly believe that the funds obtained from credit cards are interest-free. Some banks even use zero interest as their promotional slogan for credit card installments. However, in fact, the funds obtained from bank credit cards are not only interest-free but also interest-free. The interest rate is high and very high.

Take small credit card loans as an example. Some people think that there is no interest like overdraft for shopping, so they foolishly apply for small loans. However, the interest rate of this kind of small loan is very high. Generally, The annual interest rate of banks is between 13-18%, and some banks even reach 24%. The annual interest rate of credit cards of some banks exceeds 100%.

Let’s look at credit card installments again. When many banks issue credit card bills, they will advise bill holders to repay in installments. Some even clearly tell you that there is no interest. Is there really no interest? If you believe it, you are fooled. Although the bank does not charge interest, it does have handling fees. The handling fees charged by some banks are converted into interest rates of 15%--18%.

Even if the current credit card policy stipulates that "the upper limit of the overdraft interest rate is 0.5 times the daily interest rate, and the lower limit of the overdraft interest rate is 0.7 times the daily interest rate of 0.5%," the upper limit of the overdraft interest rate has reached an annual interest rate of 18 %, and the lower limit has reached an annualized rate of 12.6%, which is relatively high according to the current market pricing level. Even if current interest rates remain stable, there is still a serious policy obstacle: the contradiction between overdraft interest rates on bank credit cards and usury standards.

In the past, my country's usury standards were based on non-standard boundaries of 24% and 36%. In particular, the 24% interest rate was protected by law and was considered a sign of usury. Therefore, financial institutions had the highest loan interest rate standards and overdue loans. The upper limit of penalty interest has always been 24% as the legal standard limit. In August 2020, the Supreme People's Court newly revised the "Regulations on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases", setting the upper limit of judicial protection of private lending interest rates at four times the one-year loan market quoted rate (LPR). While it is believed that the upper limit of loan sharking will be significantly lowered by laws and regulations, thus further reducing the cost of private borrowing, financial institutions are also faced with the embarrassment of which interest rate to implement, including the 18% upper limit of credit card overdraft interest rates.

According to multiple media reports, in September 2020, in a financial loan dispute case, Ping An Bank’s request to charge overdue borrowers a penalty interest of 24% annualized was rejected by the court, and the court finally ruled that It implements penalty interest at 4 times LPR.

Although the Commercial Bank Law of the People's Republic of China (Revised Proposed Draft) began to solicit opinions from the public in October 2020, there are clear regulations on the deposit and loan interest rates of commercial banks: Commercial banks follow China's According to relevant regulations of the People's Bank of China, deposit and loan interest rates can be determined independently through negotiation with customers.

Although the Supreme Law’s judicial protection limit for private lending interest rates is set at 4 times the one-year loan prime rate (LPR), which clearly refers to “private lending” rather than “financial institutions”, the reality is that Generally, judicial agencies will refer to the upper limit standards for private lending to define the upper limit standards for interest rates of financial institutions. This has led to a very embarrassing situation with a large number of previous business regulations and processing methods of financial institutions. On November 12, the Wenzhou Intermediate People's Court announced that the second-instance judgment of the court held that the interest, compound interest and overdue interest stipulated in the financial loan contract in the case were calculated as one year based on the provisions of the newly released judicial interpretation. Adjusting the loan to four times the market quoted interest rate (LPR) is an error in applicable law and should be corrected.

This time the central bank issued a notice that starting from January 1, 2021, credit card overdraft interest rates will be determined independently by card issuers and cardholders through independent negotiation, and the upper and lower limit management of credit card overdraft interest rates will be cancelled. This also means that the credit card overdraft interest rate will not only exceed 4 times the LPR, but is more likely to exceed the 24% limit.

The loan interest rate and credit card overdraft interest rate of licensed financial institutions are not limited to 4 times LPR and can be negotiated independently with customers. Although it reflects the principle of interest rate marketization, it still faces emotional, rational and Three major confusions about the law:

Yu Qing: The loan interest rate of licensed financial institutions is not limited to 4 times LPR, which will inevitably lead to the loan interest rate of licensed financial institutions being higher than that of non-licensed institutions, which makes people feel that financial institutions The institution is a legal loan shark, which is in huge conflict with the concept of public financial institutions undertaking inclusive finance and serving the public.

Yu Li: The loan interest rate of licensed financial institutions is not limited to 4 times LPR, which is not feasible in theory. The risk of private lending is much higher than that of licensed financial institutions, but the interest rate obtained is lower. For licensed financial institutions, this goes against the economic principle of risk and return treatment.

Yu Fa: The loan interest rate of licensed financial institutions is not limited to 4 times LPR, which will lead to confusion in the implementation of the law. Different institutions apply different laws, resulting in different enforcement standards.