Personal Finance

More 'credit card slaves' trapped by crushing debt

By Ma Chao (China Daily)
Updated: 2010-07-21 17:05

 

Pedestrians pass by a self-made poster with big mobile phone number on a Beijing street. Many underground individuals or organizations are providing services of helping people draw cash from their credit cards. [China Daily]

Debtors are pushed into pit of despair

"The debt collectors are calling me every day. Not too long ago, they even called me at work," said Wang Ying (not her real name).

She said the call to her office was particularly bad, when the debt collectors were told she was not there, they threatened to visit her at work next time in person.

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Wang's husband is the reason for the harassment. He is a credit card slave who holds eight bank cards.

She said he got his first credit card in 2005 and has been recklessly applying for more ever since.

In 2008, he used the cards to get his hands on a lot of cash and lost the money gambling. Unable to pay back the debts, he asked Wang to pay them for him.

Wang said she has tried every means, including borrowing money from relatives and friends, and running up her own credit cards, all no avail.

She says it is as much as she can do to pay off the monthly minimum. Now, her cards too are deep in the red. With snowballing interest, the debt of Wang and her husband has grown to more than 100,000 yuan.

She said the debt collectors started calling her mobile phone a few months ago, asking her to pay off her debt.

Then she started getting the calls at work.

Now, she lives in fear.

Wang's story is typical for many "credit card slaves".

Since 1985 when the Bank of China issued the first credit card in the country, the availability of credit has rapidly expanded, especially during the last decade.

The ownership of credit cards has become particularly popular among China's young consumers. As of the end of last year, China's banks had issued 170 million credit cards. It is not uncommon for people to have cards from more than one bank.

With the growing number of credit card holders, however, there have been a growing number of cases of defaults on payment.

According to a blue book on the credit card industry in 2009, issued by the China Banking Association, non-performing credit card debts considerably increased from the level in 2008. The rate of non-performing debts range from two to four percent.

The growing trend showed no sign of slowing down in the first quarter of this year. Credit card holders in arrears have noticeably increased, too.

To reclaim the debts from card holders, some banks have outsourced the tasks of collecting money to companies that specialize in the work. The debt collectors, who get paid a percentage of the debt once it is collected, use various means, including intimidation and deception, to press the debtors.

A man, whose Net ID is China Ren, owes around 110,000 yuan to six banks. Last January, he cashed out his cards and used the money to open a computer store and run a few websites. His business, however, has not made a profit and he has not been able to pay the money back.

Last September, Ren's father died and he spent heavily on the funeral. Since then, he has been unable to even pay the minimum payment on his debt and has been forced to default. Now, he receives countless calls from banks urging him to find the money he owes.