State-run bank to slash its cash card interest rates

The state-run Land Bank of Taiwan (土地銀行) yesterday announced that it will slash its cash-advance card interest rates by as much as 3 percent as part of the government's efforts to ease the consumer bad loan problem.

The bank said its annual interest rate of 12.99 percent would be cut down to 9.99 percent and the preferential 9.99 percent rate would be further chopped to 8.88 percent. The new policies took effect yesterday, it said in a statement.

As of the end of January, Land Bank's cash-card lending balance amounted to NT$4.7 billion (US$144.6 million), accounting for only 1.6 percent of the market, government statistics showed.

Another state lender, the Bank of Taiwan (台灣銀行), yesterday also disclosed its plan to offer tiered revolving interest rates for credit card customers.

Now it charges an annual revolving rate of 12.99 percent, already lower than the nearly 20 percent rate charged by most private competitors.

The bank said that as soon as the semi-official Joint Credit Information Center (聯合徵信中心) establishes the credit score system -- which the government has requested happen by the end of the month -- the bank would implement a three-tiered rate system of 8.8 percent, 9.8 percent and 10.8 percent, based on a cardholder's credit profile.

This could be seen as a friendly response to opposition Chinese Nationalist Party (KMT) Legislator Lee Chi-chu's (李紀珠) suggestion on Thursday that state banks take the lead in lowering their revolving rates for credit cards to under 10 percent, in a bid to help ease the burden of heavily indebted cardholders.

The nation's total revolving credit balance for credit cards in January stood at NT$493.4 billion, down 0.26 percent from the previous month, while cash-card lending balance amounted to NT$289.2 billion, down 3.12 percent over the same period, according to the latest statistics released by the Financial Supervisory Commission on Feb. 28.