Legal Research On Dispute About The Full Penalty Clause Of Credit Card

Since1978, following the collaboration between Bank of China and Bank ofEast Asia(Hong Kong), the credit card comes into China and plays a more andmore important role in market economy. Starting with the development of credit cardmarket in China lags behind developed countries, but with the deepening of reformand opening up and the development of financial markets, the credit card businesshas made great progress. By2013, the issuing volume has reached391million,credit card users become the important component of financial consumers. Alongwith the increasing amount of credit cardholders and credit growth, many problemsare beginning to be exposed. In credit card transactions, the dispute between bankand cardholders focusing on calculating method of penalty interest. The full penaltyinterest is applied by the most domestic banks, except ICBC, which is balanceinterest. Whether is full penalty interest legal? Academics and practitioners haveopposite point of views about this.Banks rank as the monopoly in financial industry particular in the credit field,holding the dominate position in loan pricing. Credit card consumer debt as oneof the types of loans, although they are large in numbers, they have to passivelyaccept the bank’s pricing. Banks consider that the full penalty interest is a meanagainst financial risks, in accordance with the relevant laws and regulations, as wellas the rules issued by People’s bank of China, so it is lawful and reasonable. Court ofjustice shares the same view with banks in handing the disputes between bank andcredit cardholders. On the country, cardholders and academics hold the view that it isunreasonable to charge the portion of paid off parts in term of full penalty interest,which burden cardholder’s financial duty, meanwhile, banks usually don’t fulfill thepresentation obligation of full penalty interest clause at the first time, it is violationof the relevant provisions of the “Contract Law”, the full penalty interest should beinvalid standard terms. Banks use their dominate position to formulate the clauserelated to full penalty interest also damage financial consumers’ right to fair exchange, as well as right to know. Despite full penalty interest is controversial,banks have not cancelled, given the current situation of credit card market, it still hasits necessity.Full penalty interest reflects the degree of openness and innovation of bankingindustry should be improved, personal credit information system need to bedeveloped along with a blind pursuit in new-user amount and revenue growth. Theseproblems cannot be solved by legislation lonely; we need change and coordination ina wide range. As the birthplace of credit card, the United States can teach us a lessonin legislation and bank innovation, and then combining the actual situation ofeconomic development to develop solutions. The development of credit card lawsystem should be based on the relevant legislation concerning bank, increasingspecific provisions or regulations on credit card transactions, the people’s bank ofChina should put forward related measures timely based on market status. Bankingassociation should play a role of self-regulator organization, lead banks to establishcorrect outlook on development, and look forward to assume responsibility for thehealthy development of the financial industry. Banks and cardholders as directparticipants in the credit card business should make it from themselves, banks couldmaintain good relations with cardholders while pursuing profit growth, they shouldnotice it is temporary to obtain profit growth by harming cardholder’s interest, andcardholder should establish correct consumption concept, cherish the personal credit.