A Chinese credit card user was charged over one hundred yuan in interest for failing to repay two hundred yuan on time, sparking concerns as the user questioned why such a high interest rate was incurred despite mostly following the bank’s repayment requirements. The incident garnered attention.
According to a report by “First Financial” on March 17th, a Chinese credit card customer recently discovered that despite timely repayments as per the bank’s request, only a little over two hundred yuan remained unpaid. The bank then charged 133.77 yuan in interest, leaving the user perplexed by the situation.
When the user consulted the bank’s customer service, they were informed that the bank calculates interest based on the “full amount” rule. This means that interest is calculated taking into account the total consumption amount from the current billing period from the date of transaction, rather than solely focusing on the unpaid portion. Therefore, even if not fully repaid, the entire bill is still included in the revolving interest calculation.
The user considered the “full amount” rule to give a sense of “repeated interest calculation.”
Reportedly, many cardholders have encountered similar issues. On a certain Internet platform in mainland China, the number of related complaints has been steadily increasing, with over 9,000 complaints involving various institutions such as state-owned banks and joint-stock banks. The complaints primarily center around insufficient itemization of bill information and a lack of comprehensive interest calculation explanations and process displays.
Quoting an explanation from an insider at a joint-stock bank’s credit card center, the report stated, “The essence of minimum repayment is exchanging interest for time.” This means that if users choose the minimum repayment, they only need to repay a certain percentage (usually 5% or 10%) of the bill amount to avoid default, but they will no longer enjoy interest-free periods. The unpaid portion accrues daily interest from the billing date and compound interest is calculated monthly. If cardholders continue to opt for minimum repayment and make additional purchases, the interest costs will further accumulate. Industry estimates show that in a long-term revolving credit state, the actual annualized cost of such financing methods can approach 18%.
A seasoned credit card user commented, “This model has been in use in the domestic credit card industry for many years, and most banks still adopt this interest calculation method.”
Many users have raised doubts about the rationale behind the bank’s “full amount” interest rule. Some industry insiders believe that based on the logic of fund occupation, interest should correspond to the actual cost of the funds used. However, the “full amount” interest mechanism amplifies the interest base, leading to actual costs significantly higher than the expected perceptions of some consumers.
Moreover, bank practices of inadequate and unclear disclosure of information have also resulted in user dissatisfaction.
The so-called “full amount” interest refers to the scenario where if a cardholder fails to fully clear the bill by the due date, interest will be charged on the entire consumption amount in the bill (not just the unpaid portion) from the billing date until full payment is made.