Chinese Banks Crack Down on Use of Personal Credit Cards for Real Estate Investment, Stock Speculation


Multiple banks in China have reiterated their strict prohibitions on the use of personal credit cards to purchase real estate or engage in speculation on the stock market, after regulators called for a crackdown in the area.

On 29 June the China Banking and Insurance Regulatory Commission (CBIRC) issued the “Warning Concerning Rational Usage of Credit Cards for Consumption” (关于合理使用信用卡的消费提示).

According to the Warning some consumers in China had become overly dependent upon credit cards for overdraft consumption, bearing debts in excessive of their repayment capabilities.

The Warning also highlighted the use of credit card products by other consumers for investment in real estate, securities, investment funds or wealth management products.

Since the issue of the Warning several joint-stock banks in China, including China Everbright Bank, China CITIC Bank and Ping An Bank, have publicly reiterated that use of credit cards is strictly for consumption purposes.

On 11 August China Everbright Bank publicly announced that personal credit cards were restricted to daily consumption usage, and that the use of such funds for fixed asset or stock investment was strictly prohibited, and could incur punishments including quota reductions, payment stoppages, freezing or locking of guards.

Just prior to this on 28 July China CITIC Bank made a similar announcement, declaring that transactions involving the use of credit cards for home buying and securities investment could be declared invalid.

On 10 July Ping An Bank announced that credit cards can only be used by cardholders themselves, and cannot be leased, lent, transferred or sold to other parties.

Ping An also stressed that credit cards can only be used for consumption, and cannot be used for real estate development, business operations, or investment in securities.

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