Credit cards in China. Part 2

So, you received an SMS stating that the card is ready and waiting for you at the branch. Or you ordered delivery and the bank courier brought it to you. In any case, you have it on hand and it’s time to start fine tuning.

The first step is to activate the card. This is as easy as pie – a simple interface in the bank application, where you need to enter full information about the card, choose and set a pin code. If, for some reason, activation in the application does not work, you can call the bank’s hotline or seek help from bank employees. But in practice, there are no problems in the application and activation takes 2-3 minutes.

As you can see from the clock, activation lasted less than a minute

 

Now, the card is activated and the first thing we recommend to do in the course of fine-tuning is to download the application of your bank for credit card users. For example, in ICBC it is 工银e生活. Each bank has its own similar application, and although you can use a standard bank-client for basic functions like setting a credit limit, paying off debt and so on, for more subtle changes you need a special application.

First of all, let’s look at the difference in the three types of accounts. As mentioned in the previous article, credit cards can be of a single system (only Visa, for example) and co-badged (Visa+UnionPay). And there are also regular debit cards. The screenshot shows the details of each of the three accounts that have appeared.

From left to right – debit account, UnionPay card credit account, Visa card credit account

 

As you can see, the only parameter on the debit account is 人民币余额. A debit balance that is always greater than or equal to zero.

There are two fields on the UnionPay credit account – 人民币余额 and 人民币可用余额. The first is the debit balance of the card, while the second is the total available card balance, including the credit limit. As you can see from the screenshot, 10 yuan in the account + 5,000 yuan credit limit – a total of 5,010 yuan can be spent from the card. The peculiarity of the credit account is that money cannot be transferred to it by transferring “from card to card” – transfers to the debit balance are possible only from your own debit account.

There are 13 such fields on the Visa card credit account. These are all currencies supported by ICBC – dollar, euro, Hong Kong dollar and so on. The advantages of a multicurrency account are that everything will be charged in the currency in which you pay without a conversion fee.

All in all, not much different from credit cards around the world.

Under each card, 还款日 is displayed – how much is left until the day of debt repayment. In other words, it is necessary to pay the debt before this day, after which it will already be considered overdue with corresponding sanctions. Naturally, except for the benefits provided by 容时容差.

The bank softly reminds us that there are only 13 days left to pay the debt

 

Do not rush to link your card to Alipay and Wechat Pay. First, do the following.

Please make sure that the 实名制 information in Alipay and Wechat Pay matches the information you provided to receive the card. Since the numbers of foreign passports tend to change with each new passport, the surnames change after getting married, etc. And it is quite possible that the full name + passport number under which you registered in Alipay and Wechat Pay does not coincide with those with which you received the card. Possible blocking and a long saga of account recovery.

In Alipay, everything is done quite simply – it is enough just to send a request to technical support and provide photos of the old and new passports. In Wechat Pay, the procedure is more complicated – you need to close the payment option and then reopen it, with a new name and passport number. But in any case, it is easier than recovering a blocked account.

Even if it looks shipshape, do not rush to link the card. First, carry out several transactions with it. POS purchases, transfers and so on. Due to the large number of cases of fraud with credit cards, Wechat Pay will most likely block your wallet after linking a credit card and require you to confirm the fact that you are the owner of the card. And the easiest way is to confirm this with an account statement. If you have already had transactions, you print out 对账单 in the bank, send it to Wechat and you will be able to use it again in a day. While if there were no transactions, you will not be able to get the statement which would mean the start of yet another saga.

Usage

There are absolutely no differences from using a debit card. After linking to Alipay/Wechat, you can select your credit card in the payment interface and pay by an absolutely identical procedure.

The only thing is that some sellers (for example, on Taobao) do not accept credit card payments, which they indicate in the product description.

In the description of this product, the seller indicated that s/he accepts credit cards for payment

Repayment, interest and sanctions

The most annoying, but alas, necessary part of using credit cards.

The complete calculation algorithm is more confusing than a course of number theory delivered in the Klingon language and besides that, it differs from bank to bank. So, we have collected the basic concepts and terms.

透支利息 – overdraft interest

信用额度 – credit limit

记账日 – billing date

还款日 – due date

滞纳金 – penalty

最低还款额 – minimum repayment amount. Usually set at 10% of the debt.

Well, ICBC sets the overdraft interest at 0.05% per day. After activating the credit card, you will receive an SMS indicating the billing date and the due date. For example, in this particular case, the billing date is set on the 28th, whereas the due date is the 21st.

Billing date and due date

It is highly unadvisable to use a credit card for cash withdrawals or for transfers between cards. There is no grace period for withdrawals and transfers.

A grace period of 25 to 56 days is partly true, partly a marketing gimmick. Twenty five days is the minimum period that can elapse from the date of purchase to the date of billing, and 56 days is the maximum. If you purchase on the billing date, then 56 days will pass until the next billing date.

Let’s look at examples using dates from SMS.

On September 10, I purchased 1,000 yuan worth of goods by credit card. On September 28, the bank issued an invoice stating that I spent 100 yuan between August 28 and September 28. Starting from September 28, I have 25 days – until October 21, in order to pay the debt without interest. If paid during this period, the debt is considered repaid on time. Starting from October 21, interest begins to accrue, and in case of payment after October 21, I will have to pay interest and penalty (usually, the penalty is 5% of the minimum payment, which, in turn, is 10% of the total debt). That is, for a debt of 1,000 yuan overdue for 30 days, I will have to pay only 1,000*30*0.0005) 15 yuan + a penalty of 5% of the minimum repayment amount (10% of 1,000 yuan = 100 yuan), 5% of 100 yuan – 5 yuan. Plus, of course, the principal.

Should I have purchased the same product for the same amount on September 29, this amount would be reflected in the invoice dated October 28, and I would have to pay it before November 21, which is the maximum 56 days.

Credit card cannot be used to transfer funds to other WeChat and Alipay users. This is due to the fact that interest on cash withdrawals and transfers begins to accrue the very next day, but a grace period applies to interest on purchases.

 As you can see, the credit card cannot be selected as a means of payment in the “money transfer” interface in Wechat

If you want to transfer money from a credit card to a debit card or withdraw cash, the most suitable option is to use the 急用钱 (urgent money) service in online banking to transfer money to a debit account. Abroad, you can withdraw cash as usual at an ATM, but remember, there is no grace period for withdrawals and transfers.

Credit card is an automatic approval for installment purchases (分期付款). However, in China the concept of installment plan differs from the common understanding. To purchase goods in installments, the available limit on the card must exceed the total cost of the goods. After purchase, this amount will be blocked in the credit limit and monthly invoices will be issued depending on the selected installment period.

For example, a phone is purchased for 8,700 yuan, while a credit limit is 10,000 yuan. After the purchase, the credit limit becomes 1,300 yuan, and the debt corresponding to the first payment appears on the card – 2,901 yuan, which must be paid within a month. Exactly one month later, the debt increases by the amount of the monthly payment – and so on.

To buy in installments, you need to use the store inside the online bank, a website that supports this type of payment. For example, the Apple Store supports installment payments using 花呗 (Huabei is a virtual credit card from Alipay) and ICBC, CCB and Merchants Bank credit cards.

Installment purchase of a product in the ICBC store

Naturally, a Visa card can be used for pre-authorization when paying on the Internet – taxis, hotels, etc.

Here, one ruble was blocked on my card after linking the card to Gett-taxi 

After six months of delay and the absence of even minimal payments on the loan, the bank usually goes to court. Please use credit cards responsibly.