Credit card consumption reached 20.5% of private consumption in 2005

This article was published by the Taiwan Headlines on March 16, 2006. It reports that according to government statistics, consumption by credit cards amounted to NT$1.4 trillion (US$43.75 billion) in 2005, which accounted for 20.5 percent of overall private consumption in that year.

Thanks to strenuous promotion by financial institutions, consumption by credit and cash cards has been growing rapidly in recent years. The ups and downs of consumption by credit cards has become a vital tool for observing changes in private consumption. This is because private consumption accounts for 63 percent of Taiwan's gross domestic product (GDP).

In 2000, purchases made through credit cards totalled NT$720 billion (US$22.5 billion), accounting for 10.9 percent of overall private consumption. But the figure doubled to reach 20.5 percent in 2005, which indicates that domestic consumers have become more accustomed to using the cards.

According to the government's Directorate General of Budget, Accounting, and Statistics (DGBAS), over the past four years, consumption by credit cards has been growing at an annual pace of more than 10 percent. In 2004, the growth rate reached as high as 25.6 percent.

For the first half of year 2005, the growth rate hit 21 percent. However, since the end of 2005, there has been a problem in Taiwan about the so-called "card slaves" - those who are unable to repay their credit-card debts. As the government moves to amend various regulations in order to reduce the number of card slaves, the growth of purchases rate by credit cards is also affected. Consumers are warned about the potential problems of using credit cards and have become reluctant to use them.