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Banks tout cash-advance plans for holidays

Chinatrust Commercial Bank (中國信託銀行), the nation's largest credit card issuer, along with some of its rivals, said that in light of people's rising needs for cash during the Lunar New Year holidays, they are offering promotional plans on cash advances for their cardholders.

"Our customers have high needs for cash during Lunar New Year, so we are reducing cash advance fees for holders of our credit card who have good credit records," said Michael Chang (張智詮), senior vice president in the bank's credit card division.

Cash advances through credit cards allow cardholders to borrow money through automatic teller machines, but the transactions carry service fees and annual interest rates that can go as high as 20 percent.

According to statistics released by the Bureau of Monetary Affairs of the Ministry of Finance, cash advances through credit cards amounted to NT$14.7 billion in 1996 and reached NT$132.5 billion in 2002.

These statistics show that the cash advance services offered by credit card companies are booming, and have not been affected by the prosperous business in cash-advance cards that was launched in 1999.

Chinatrust leads Taiwan's credit card sector, with 5.4 million cards in circulation. Its promotional plan targets customers who have held credit cards for over one year and who have paid off their credit card debts or have made their minimum payments on time.

Those who qualify for the program -- nearly 10 percent of Chinatrust's cardholders -- will be charged only NT$150 as a service fee per cash advance.

In the past, customers were required to pay NT$150 plus 2.5 percent of the amount borrowed. The new program will end at the end of next month.

Both Union Bank of Taiwan (聯邦銀行), with 2.37 million cards in circulation, and Fubon Bank (富邦銀行), with 2.34 million cards, said they will shoot for a share of the cash advance business during the Lunar New Year season.

Union Bank is considering extending their cash advance service to general credit card holders.

"Our special cash-advance promotion for the Lunar New year offers several advantageous repayment options, such as lower interest rates, to alleviate customers' burdens when they make payments in the future," Maggie Chen (陳妍年), a Union Bank manager, said.

"Fubon is considering elevating cash advance limits for customers with outstanding credit records, to up to 100 percent of their credit lines," said Fubon's vice president for credit cards, Chan Wen-fu (詹文福).

While both credit cards and cash-advance cards offer cash-advance service, Chan said the customers targeted are different.

"When they need money urgently, most holders of credit cards borrow cash through the cash-advance service we offer," Chan said.

"Cash-advance cards, on the other hand, mostly seize a segment composed of students, or people between 20 and 25 years old, who are not qualified applicants for credit cards."
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