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‘Card slaves’ live on edge as debt deepens
2014-11-19
By Lu Feiran

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SEVEN banks were fined by the Shanghai Banking Regulatory Bureau over the weekend for improperly issuing credit cards to a Shanghai family of three who committed suicide in June because they couldn’t pay the bills they had run up on their credit cards.

The total: more than 10 cards, adding up to 500,000 yuan (US$81,580) in debt.

The tragedy occurred in northeast Shanghai’s Hongkou District. The family, identified by police only as 69-year-old Zhang, his 62-year-old wife Lin, and their son 25-year-old Zhang, lived in a neighborhood built in the 1970s.

The case revealed the bittersweet world of a group of people — “card slaves.”

On June 4, police received a report from Lin’s sister, saying that her sister may intend to commit suicide as Lin mailed a will to her and no one answered the door at their home. The police eventually found that all three died in the one-room apartment they rented. The cause of death was carbon monoxide poisoning.

“I heard that the wife lost a lot in futures, and she asked her son to go on with credit cards,” said the family’s neighbor who asked to remain anonymous, referring to futures securities. “But they got deeper and deeper, and eventually went onto the road of doom.”

Over the weekend, Shanghai’s banking regulator fined the seven banks a combined 2.4 million yuan for irregularities in issuing credit cards and monitoring transactions.

Shanghai Pudong Development Bank, the Industrial Bank, the Bank of Communications, Minsheng Bank, the Bank of China, the Industrial and Commercial Bank of China and Citibank were accused of failing to review authenticity of applicants’ information, granting excessive credit, and managing abnormal transactions, the Shanghai branch of the China Banking Regulatory Commission said. The bureau said the banks failed to double-check the truth of the applicants’ information, including their incomes and payback abilities.

Meanwhile, the banks didn’t apply the rule of “credit limit deduction” when issuing the cards. The rule says that a bank should deduct the credit limit that has been granted by other banks: If a bank decides that an applicant’s economic condition allows a credit limit of 50,000 yuan, but because he has another card with a limit of 20,000 yuan, then the bank should extend no more than 30,000 yuan in credit.

There have been other extreme “card slave” cases. In 2011, a woman named Huang Jun committed suicide in a detention house in Ningbo, Zhejiang Province. The reason was believed to be the 87,000-yuan overdraft of her two credit cards.

Huang was detained in May 2011 for malicious overdraft. Although Huang’s family was not convinced of the charge because she was discussing payback with the banks before being detained, they admitted that Huang didn’t understand credit card regulations.

She had four credit cards from different banks. Drawing cash from the cards allowed her to invest in gold and futures. After she lost in the investment, it was difficult to pay back all the debts to the banks.

Huang’s sister said she believed it’s more important to pay the debt to friends, and the debt to the banks “didn’t really matter,” but she didn’t know how late fees and interest would snowball.

Huang tried suicide twice in the detention house, succeeding the second time.


Student clients

Apart from people who lost in investments, many college students have also become “card slaves” before graduation, with their parents generally shouldering the heavy debt for them.

Now many banks promote credit cards with a low credit limit on campuses. They have tried to attract students with small gifts and payments by installments and drew many student clients.

As early as 2007, the banking regulatory bureau issued a warning about college students using credit cards. The bureau said some banks exempted the students’ payback duty in the contact, so that as long as there’s overdraft, the banks would turn to students’ parents.

Students said they’re usually aware of how much money they have spent on the cards, but sometimes they may got a little carried away.

“Usually I do part-time jobs to pay back the bank,” said Sophie Wang, a media major at a Shanghai university. “But there can be once or twice that the incomes of the job cannot make up the debt, and I had to ask for my parents to pay the bank for me and I returned the money later.”

Wang said sometimes she loved to buy some electronic gadgets, which is her main credit card expense but are also sometimes costly.

Sociologists said “card slaves” are common in developing and advanced countries alike. Common characteristics include lack of a stable income and consumption expectations beyond their ability to pay.

“Drafting the income from the future is the main promotion for most financial institutions,” said Zhang Haidong, a professor in the College of Social Science at Shanghai University. “Some consumers may be captivated by the beautiful bubbles created by the banks and became ‘card slaves’ unconsciously.”

Zhang said economic burden is not the only risk that “card slaves” need to shoulder. Sometimes credit damage is more dangerous.

“After all, banks make more money if there are more ‘card slaves’,” he added. “So consumers need to assess their consumption ability before applying for credit cards.”

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