Measures taken to help "card slaves"

This article was written by Susan Yu and published by the Taiwan Journal on March 3, 2006. It reports that the government and various financial institutions in Taiwan have taken action to help people in dealing with credit-card and cash-cart debts and related social problems.

In recent years, Taiwan has witnessed a surge of consumer borrowing as local banks have aggressively competed to market credit cards and cash cards. As banks charge an average interest of 18 to 20 percent per annum, consumer-loan burdens have piled up to a point where many cardholders cannot afford to repay the debts or even pay monthly interest charges.

It was reported that some local banks were forced to write off some US$2.2 billion in bad credit card and cash card loans in 2005. Consequently, the U.S.-based credit-card issuer American Express Co. recently announced that it would temporarily suspend new-card approvals in Taiwan until the market solution improves.

To help cardholders deal with their debts, Taiwan's Financial Supervisory Commission recently established 20 new telephone hotlines to provide counselling and receive complaints. Eight card-issuing banks also established similar telephone hotlines in 2005 to help qualified cardholders settle their debts.

More significantly, the Financial Supervisory Commission has been working with the Council of Labor Affairs and the Ministry of Economic Affairs to provide job opportunities and low-interest loans for establishing small businesses. Meanwhile, the Ministry of the Interior recently established 20 telephone hotlines to field complaints about any "inappropriate" debt-collecting methods. The National Policy Agency under the ministry will investigate complaints and take legal action against violence-threatening or otherwise unlawful debt collectors.

Finally, Taiwan's Legal Aid Foundation recently announced that it has organized a group of lawyers to provide help specifically for "card slaves". The legal-aid service will focus on card-debt settlement and the revision of related laws.

Statistics provided by the Financial Supervisory Commission's Banking Bureau show that some 400,000 cardholders in Taiwan have trouble repaying their debts. Bad debts are estimated to total roughly US$24.6 billion, accounting for approximately 5 percent of non-performing loans issues by Taiwanese banks.