The fees Chinese banks charge consumers who fail to pay their credit card bills on time are far too high and financial authorities need to do something about this problem now.
Chinese media reported Sunday that a man who had overdrawn 110,000 yuan ($17,600) on his credit card over a five year period now has to pay 440,000 yuan to the bank to cover his original debt, the interest and the fines placed on it.
Most banks charge daily interest of 0.05 percent on debts when consumers cannot pay them back on time. As punishment for a delay, this is an acceptable rate. The fines that banks charge credit card users who fall behind on payments though are extortionary in comparison.
It is in the interest of banks to charge reasonable fees. Sky-high penalties and fees will only scare away potential customers and slow down the development of the credit card industry.
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