Government to treat card debt as social problem

This article was published by the Taiwan Headlines on March 10, 2006. It reports that the government in Taiwan plans to adopt more active measures to deal with the social aspect of credit card debt and cash advances on debit cards. Government agencies such as the Financial Supervisory Commission will also teach students how to avoid amassing large debts.

The government's view is that the principle of repaying debt should always be honored. However, those who find it difficult to resolve their card debt problems should receive help. The Financial Supervisory Commission, the Ministry of Interior and other related agencies will work hard to fight against the use of violence, intimidation or harassment in debt collection.

So far, the total amount of loans issued through credit and cash cards accounted for less than 5 percent of total loans. In other words, the non-performing loans from cash and credit cards in Taiwan is less than NT$20 billion.

Official statistics also show that 45.49 million credit cards were in circulation by the end of 2005, with NT$494.7 billion in outstanding loans and a 2.44 percent non-performing loan ratio. Meanwhile, 537,000 cash cards had been issued by the end of 2005, with total loans of NT$298.5 billion and a non-performing debt radio of 1.84 percent.

Most significantly, official statistics show that over 64 percent of the combined debt for credit and cash cards was amassed by card users between 30 and 49 years of age, while people between 20 and 29 years of age accounted for 21.6 percent.

To counter the credit debt problem, in April 2003 the Financial Supervisory Commission had begun putting restrictions on the issuing of cash cards to students. In April 2005, the commission instructed banks to change their advertising and stress the responsible use of credit and cash cards as well as the important of proper debt management.

In January 2006, the Financial Supervisory Commission set up a service that enables card users to negotiate with banks on alternative repayment schedules when they have financial difficulties. In February, the commission launched a series of forums and public advertisements on the "debt service negotiation mechanism". A special telephone hotline was established in January 2006 to handle appeals or questions from debtors regarding the new mechanism.

Statistics show that from January to February, the hotline had accepted 14,343 cases worth approximately NT$26.1 billion. During the same period, the hotline had handled 8,773 cases with 7,041 successful negotiations that were wroth about NT$11.8 billion. The success rate was 80 percent.