Fri, Jun 25, 2004 - Page 10 News List

Cathay United launches new `budget' card

SPENDING PLAN The bank says the Aura card is ideal for people buying big-ticket items who want to set their own payment plans, but others question if it will have much appeal


Cathay United Bank (國泰世華銀行), the commercial banking unit of Cathay Financial Holding Co (國泰金控), yesterday introduced its "budget" card -- a credit/cash-advance card that allows users to determine their own monthly payments.

Holders of the new card -- also called "Aura card" because it is supported by France's Cetelem Bank's Aura Network -- decide how much they want to pay per month when they apply for the card, Joseph Jao (饒世湛), chief senior executive vice president of Cathay United, said at a press conference.

The installment payments can range from from NT$1,000 to NT$10,000.

The interest is calculated by the monthly installment and the annual percentage rate is 19.98 percent.

Aura cards are currently used by 15 million people in 17 countries worldwide, said Olivier Gonzalez, general manager of Cetelem Bank in Taiwan, who also attended yesterday's event.

Like a Visa or Mastercard credit card, an Aura cardholder can make purchases or withdraw cash from ATMs.

The difference is that an Aura cardholder only pays the fixed monthly installment set at application time, Jao said.

"This card is designed for customers who want to buy big-ticket items and pay according to their own budgets, which is a brand new concept for local consumers," Jao said.

The market for buying pricey products, such as electronics, furniture and automobiles, is about NT$300 billion to NT$350 billion annually, and this is also a main sector for consumers to pay by installments, he said.

However, most installment plans are set by the credit card issuers or stores, and not based on the buyers' own budgets, he said.

At present, consumers can use the Aura card at 875 shops, including the UK-based hypermarket Tesco Stores Co Taiwan, MFI International Taiwan Co (三商美福傢俱), and 3Cnet Informatics Inc (旭曜電通), a computer and peripherals chain store.

Citibank Taiwan vice president Cheng Cheng-mount (鄭貞茂) -- who is also an associate economics researcher with the Taiwan Institute of Economic Research (台經院) -- noted that local consumers are generally receptive to new financial products.

However, he cautioned that Cathay United needs to ensure its target customers clearly check to see if the card fits their spending habits.

Cash-advance cards, for example, are ideal for providing small loans for students or younger consumers with lower purchasing power who run short of cash every once in a while, Cheng said, adding that this strategy works very well.

Initial interest in the budget card among consumers appears to be mixed.

"The card will only facilitate impulse buying. The fact is, the lower installment payment I choose, the more interest I would have to pay," said Albert Kao (高明偉), a college graduate.

Wang Mei-yueh (王美月), a Taipei housewife, said she likes to buy on the installment plan, but only when the interest rate is zero.

"Since many stores such as Eastern Home Shopping Network (東森購物) provide interest-free installment plans that are 24-months long at most, why bother to pay interest [on a budget-card plan]?" Wang said.

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