CCTV Host Bristles Over Penalty Rate on CCB Credit Card

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A prominent Chinese television host has sought to draw attention to what he considers to be unfair credit card practices on the part of the China Construction Bank (CCB).

Li Xiaodong (李晓东), the host of CCTV’s “Legal Report,” has taken CCB to court over interest accrued on his Dragon Card Credit Card, that be believes is an unfair punitive fee.

Li claims he used the card to makes purchases of over 18,000 yuan and subsequently repaid almost the entire amount, yet incurred interest of 317 yuan after leaving a mere 69 unpaid.

According to Li this form of a”full sum punitive rate” comprises an unfair practice on the part of the big five lender.

“Full sum punitive rate” refers to the card issuer charging the card holder interest on the full sum on the credit for the month, irrespective of the amount repaid for that particular timeframe.

This means if cardholders are unable to pay the outstanding sum in full at the end of the month and have only 1 yuan left outstanding, they will still be subject to  interest on the full amount.

Researcher Song Hongjun, a senior researcher with the People’s Bank of China, said to local press that the full sum punitive rate was not mainstream practice amongst international lenders, and a concept unique to the Chinese banking sector.

Operating with an increasingly difficult and competitive environment, more and more Chinese banks are acknowledging the unfairness of the full sum punitive rate, with the Industrial and Commercial Bank of China, the Agricultural Bank of China and the Shanghai Pudong Development Bank all abandoning the practice, and only charging interest in the remaining unpaid amount.

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