Taiwan’s Cash Card Craze

By | May 15, 2005

A recent report in Taiwan stated: As of the end of March, 3.81 million cash cards were issued in Taiwan, with an outstanding loan figure of about NT$270.5 billion.

A cash card in Taiwan is a form of unsecured loan, in the form of a credit card, and much like the cash advance features of credit cards. However, their prevalence in Taiwan’s society is causing much concern, just as the prevalence of credit cards in Western society does.

I calculate that the average balance is NT$71,000 per card outstanding, which is approximately 2 months salary. Now this of itself wouldn’t necessarily be cause for alarm. However, many people have two or more cards, each with sizable limits.

What’s the interest on this? Each card has interest rates of 20% per annum or more… That would be about more than NT$1185 per month in interest charges alone. Remember that people have 2 0r more cards, and credit cards, too.

This is scandalous esp. when you consider who the banks have been lending to. Principally these are people without a good credit record, low salary employment (because of youth?), students, etc. And the advertisements are just farcical, showing people jumping for joy, because now they are in debt.

Is this crazy or what? Or is it just banks pure desire to generate excess and even perhaps gross profiteering.

And yet, it is not as if the banks were putting a gun to people’s heads and said ‘borrow.’ But surely they must have a fiduciary duty of some sort to encourage sensible lending, as the borrowers are THEIR customers, too.