China Embraces Credit Cards

Untapped market prompts banks to aggressively market plastic
By Nick McMaster,  Newser Staff
Posted Oct 22, 2008 1:36 PM CDT
Though Chinese tradition dictates no "eating next year's food this year," the younger generation is "more comfortable spending tomorrow's money today," one banker says.   (AP Photo)
camera-icon View 3 more images

(Newser) – Banks are moving to tap China’s lucrative market for credit cards, issuing millions in new plastic in recent years, the Los Angeles Times reports. There are about 100 million credit cards today in China, up from 3 million in 2003. And the market is still tiny, by American standards: The average Chinese consumer has only two cards, while an American has five.

The room for expansion means Chinese banks could issue 1 billion new cards in the next 10 years, analysts estimate. Risk is manageable so far, with only 2%-3% of loaned credit defaulted on, and 70% of Chinese cardholders paying off their balance each month. Still, as this is the first Chinese generation to experience credit, the threat of charges run amok is a worry.