Credit card companies are using low interest rates to lure away customers from their competitors.
To win new accounts, companies such as Standard Chartered Bank are offering interest rates as low as 4.99 percent.
But the cheap rates come with a catch. After three to six months at the low introductory rate, the rate climbs to a level that most credit card companies charge -- between 15.7 percent and 20 percent.
"With most people in Taiwan already having more than two credit cards each, it's difficult for new market entrants to boost their numbers," said Sammy Lo (
Basically, account holders who carry a balance from month to month can transfer the amount owed to an account at Standard Chartered. The card holder will receive the 4.99 percent rate for between three and six months.
According to the Ministry of Finance, the number of credit cards issued in Taiwan reached more than 25 million in March. That means the nation's seven million credit card holders carry an average of three cards each.
Credit-card spending has increased from NT$37.4 million at the end of 1991 to NT$19.8 billion last year, according to the ministry.
In addition to Standard Chartered, other companies offering low rates to win new accounts include American Express Bank Ltd, United World Chinese Commercial Bank (
Lo said the reaction to the low interest-rate offer so far has been encouraging. "At the end of 2001, the number of our subscribers tripled from the same period in 2000," she said.
Since entering the Taiwan marker roughly three years ago, Standard Chartered has issued about 1.2 million credit cards as of March, according to the finance ministry.
"Our sales improved significantly after launching the `balance-transfer service,'" Lo added.
Most of these new subscribers are young shoppers between the ages 20 and 28. "They are used to paying via credit cards and always swipe more than what they earn," she said.
But with the economy in a slump, consumers are becoming more sensitive to interest rates and are looking for "economic" credit card plans, Lo said.
A representative from a consumer group, meanwhile, warned card holders to read the fine print carefully before opening a new account
"The new practice sounds very attractive, but there are some rules consumers may easily miss," said Lei Li-fen (
For example, credit card companies will normally charge users roughly NT$1,000 to transfer their balances.
Also, some might not be aware that the low introductory rates are available for just three to six months, and could be surprised when the rate jumps to as high as 20 percent afterward.
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