Research On Legal Control Of Overdraft Risk Of Credit Card

Credit card overdraft is the basic form of credit card operation, it reflects the bank credit, and its essence is for card-issuing banks to honor cardholders a consumer credit. Credit card overdraft brings high profits for banks, as well as great risk. The risk of credit card overdraft is that cardholders cannot afford to repay credit card debt or are unwilling to repay credit card debt, so that banks could not recover the debt or recover the debt in time and cause the possible loss for banks. In the period of rapid development of credit card, the legal control system of credit card overdraft risk should be established, it is of positive significance for the protection of obligee's interests and for the promotion of the healthy development of credit card market.In various means of social control, since legal system has the unique social control function, as well as the effective regulation and guarantee of credit, legal system is the best choice for risk control of credit card overdraft. The United States, as the cradleland of credit card, formed a relatively perfect legal control system of credit card overdraft risk after nearly 100 years development, it is worthy of use for reference for China that is in the initial stage of the development of credit card.Legal control of credit card overdraft risk can be divided into the external legal control system and the internal risk management system in banks. The external control systems of credit card overdraft risk include: legal system that adjust credit card, personal credit system, cardholder bankruptcy system, credit card security system and administrative supervision system on the running of credit card. Internal control systems of credit card overdraft risk include two parts: risk control before the issue of credit card and risk control after the issue of credit card. Risk control before the issue of credit card includes: risk prevention of the issuing bank, credit status investigation; risk control after the issue of credit card includes: risk prevention, risk decentralization, personnal credit management system and risk compensation system. Regarding to both the external control or the internal control, there are deficiencies in China's legal control systems of credit card overdraft risk, and further reform and improvement is needed in order to better control the risk of credit card overdraft.