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Credit card slaves turn to suicide and crime
Ms. Shen earns about C$1,000 a month.
But she has chalked up some C$200,000 in debt by swiping her 10 credit and cash cards.
"Two years ago, I started using my credit and cash cards to obtain cash advance to pay bills because my husband's company wasn't doing well," said the 50-year-old Taiwanese woman, who declined to give her full name.
"But I didn't know that the interest rate was so high," she told the The Straits Times.
The paper said Shen is among some three million "credit card slaves" in Taiwan, a worsening social problem that has sparked calls to tighten lax rules governing the competitive consumer lending market.
Rollover credit debt hit NT $492.9 billion (C$17.3 billion) in October, up 10.2 per cent compared to last year, according to official figures. Credit is rolled over when a card holder pays only the minimum sum, which ranges between two to five percent of total spending, allowed every month.
The phenomenon has sparked concerns, with the local media inundated with reports of Taiwanese committing suicide or turning to crime to pay off their debts.
It has also fuelled fears that a consumer loan crisis, which hit South Korea a few years back, may be repeated in Taiwan.
Some critics blame banks, which are accused of issuing cards too freely. For instance, students aged 20 and above can apply for a credit card even if they have no fixed income.
"Sometimes, they do not even need to apply. The banks will call them up and offer them credit cards," said Chien Hsi-chieh of the Alliance of Fairness and Justice, a non-governmental group which is helping these "credit card slaves."
Advertisements proclaiming that "lending is noble" have also glorified such practices, charged observers, who say banks often fail to explain the fine print to credit card holders. In a bid to stem the
problem, lawmakers earlier this month proposed capping interest rates for credit card and other unsecured loans. But the controversial draft legislation was shelved amid warnings that it could trigger a consumer lending crisis and undermine investors' confidence in Taiwan.
"After enjoying the convenience of buying on credit, these credit card slaves have turned around, blaming banks for issuing cards too freely and even lobbying for measures to cap interest rates,” said the Commercial Times in an editorial.
By the numbers
- Some 46 million credit cards were issued by October, up 6.5 percent from last year.
- About 9 million Taiwanese-or close to 40 percent of the population-are credit card holders, according to estimates.
- On the average, each credit card holder owns four to five cards.
- Some 2.6 million Taiwanese have outstanding credit card debts. Rollover debt hit NT$492.9 billion (C$17.3 billion) in October, up 10.2 per cent compared to last year.
- More than 400,000 Taiwanese have been declared bankrupt because they are unable to clear their credit card debts.
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