| Summary: | In recent years, while the cost of funds has fallen, credit card rates have remained stubbornly high, spurring legislators to consider imposing interest rate ceilings on credit card rates.
The fast development of the credit card business depends on its potential high profit. Internationally, the credit card annual interest rate maintains 18% ~ 24%. Moreover, it does not change along with the benchmark interest rate. Chinese credit card interest rate formulated in 1996 was "the date interest rate is 5/10000 within 15 days, 10/10000 within 30 days, 20 /10000 above 30 days". In 1999 it was adjusted, "date interest rate is 5/10000", which has lasted to present. At present, China's credit card overdraft annual interest rate is18.25 %, which is far higher than bank deposit rates over the same period and other lending rate. To a certain extent, high overdraft interest rate affects the circular credit function of the credit card.
Whether the daily interest rate of 5/10000 is reasonable? How should the banks develop more suitable interest rates for the market? How should the consumers choose the rational consumption patterns under the existing interest rates? This paper carries on a further discussion on these questions. The three generations of models determined by the credit card exchange fee will be analysed in the following parts.
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