[taihunggao]

i learned something interesting today (for me, total nerd, interesting)
there are 1 billion debit cards in china.
there are only 50 million credit cards. and 85% of those pay them off every month.

the credit card business is pushing hard and predicting massive growth etc.

but is the credit card model a good thing to push on a country which has a huge savings culture?

the credit card today is a no brainer - try living without one, it's a pain i tell you. but why has that "global citizenship" got to be linked to debt? is there another model which could apply to china, which doesn't yet have a credit card culture. Where you could introduce the global payment and identity convinience, but you don't have to sign a debt contract with a bank to get it?

is it evil to force (or persuade through heavy marketing) the 25-33 year olds of china to spend spend spend, get into debt and move away from their saving culture and family care?

not questions i could ask at the presscon without sounding like some wind up late night BBC2.....

[XI_YAN]

Wow what an interesting question & not just 4 China. The West had a culture of saving which has fallen by the wayside. But are credit cards to blame or are they a symptom of other shifts in socio-economic status? With rising inflation & high costs of essentials particularly in emerging economies is living without debt possible? Not only for the individual but in terms of generating revenue to drive the economy fwd through consumption of goods?

[XI_YAN]

The question is 'Are CC's a necessary market force in a Capitalist economy?' Having credit to spend on goods beyond the bare necessities creates desire for the goods which drives manufacturing, creates employment etc. The need to earn more to satisfy your desire & service the debt drives the individual to improve his earning potential even starting his own business & creating even more employment. BUT excess consumer spending results in tragedies

[pin]

Credit in the UK is MASSIVE. However, if used well I think credit cards are good things.

For me they are a convinient way of paying, rather than having to carry cash. They are also secure and provide certain protections.

Also means that I don't have to keep a lot of money in my current account and can keep more money in savings.

[jaykay]

There has been a massive shift in recent years in China. People are borrowing like crazy from banks and re mortgaging houses just to buy into stocks - there will be a lot of pain to come sometime in the future when people lose everything.

The outlets that accept credit cards are increasing every day so the usefulness of the cards is rising. Remember the banks have traditionally been restricted in the products they sell which is why debit cards are so popular. Now that the sector is loosening not only will they become more popular they will become status symbols and we all know that mainlanders love having their status symbols.

[taihunggao]

yeah jaykay, i hadn't even thought of the status symbol side of it... it will be madness! they won't just be happy with gold platinum and black, not the types who leave the big fake price tags on their big fake LV bags to show they're not big fakes (seen on mainlander in central last week)
i want a "hydrogen" card. tiny, ubiquitous, gets everywhere, light. and i want it implanted in my forehead like an octopus card.

[chadoops]

I prefer credit cards because of the convenience. Just make sure to watch your spending and pay your bills every month. The other thing that I find useful is the discounts and points you earn when you spend...

the c.

[chadoops]

I prefer credit cards because of the convenience. Just make sure to watch your spending and pay your bills every month. The other thing that I find useful is the discounts and points you earn when you spend...

the c.

[sarpesius]

The credit card is useful and, for certain types of purchases, essential. A lot of international travel would not be done were it not for credit cards. If credit cards did not exist, the travel industry would have to re-invent them. They prevent a lot of theft because you do not have to deal in cash so much.

There is a very big problem with them. Credit card issuers are mainly banks. They are constantly looking for new ways to suck money from the mass of the population. They transfer this wealth to money managers, brokerages, etc who make money by manipulating financial markets; and to businesses to fund new projects like new oil exploration.

In the 90's in America, credit was very cheap. You could get 7-9%, including cash advance, which is very useful for travelers to get living expenses away from home.

When the banks sucked all the money they could out of the population with this tactic, they raised the rates and especially the late fees in the late 90's early 2000's.

When they had reached the limit on what they could squeeze out of the population with this, they turned to lowering the cost of buying and mortgaging houses. They hoped to get people to give up their money more readily in the hopes of owning property.

Now these loans are going bad because the banks and others deceived people into taking out loans they could not repay, and some say this is the reason for recent stock market weakness. If money managers cannot get any more money to invest from the banks, they will stop buying stocks.

The banks need the population to use credit cards, so the average person pays more for goods and services than the sellers' price. This is how the banks gain extra capital. This means the banks need to convince the average person to get things he does not need, and appear to be richer than he really is. Notice how the credit card companies put advertisements in magazines with expensive watches.

Eventually the whole house of cards crashes down. The average credit card customer and mortgage and loan taker won't be able to keep up his payments. The banks suffer an increase in NPL's -- non-performing loans. Banks with a high amount of NPL's will be in danger of going bankrupt. This happened in Japan a couple of years ago. They won't make any more loans to businesses to expand or maintain operations, so businesses have to lay off workers, causing millions of people to lose their jobs.

This is the reason for recessions and depressions that afflict capitalist economies every few years.