Notice Prohibiting Gold Investment with Credit Cards
Warning of Control Measures for Violators
Amid a surge in "gold investment" fever in China, Chinese commercial banks have begun to crack down on gold trading using credit card cash advances, according to a report by Chinese state media on May 11.
On this day, Economic Daily reported, "Recently, gold prices have fluctuated at high levels and have repeatedly set new records," adding, "Enticed by the promise of high returns, some investors are engaging in arbitrage by buying and selling gold using credit card cash advances or consumer loans, and numerous related strategies are being shared on social media."
The report continued, "In response to such reckless investment behavior, several banks, including Industrial Bank, Bank of Communications, Jiangsu Bank, and Guangfa Bank, have recently issued notices prohibiting credit card funds from being used for investments in gold, stocks, and similar areas. Violators will be subject to control measures."
Banks warned that withdrawing cash from credit cards to trade gold not only violates card usage regulations but also exposes individuals to funding risks.
If losses occur due to gold price fluctuations, there is a risk of bearing fees and other costs on the borrowed money from the card company, as well as the possibility of a negative credit record. Banks also have the right to reduce credit limits or demand early repayment, they added.
Recently, Chinese financial authorities have been tightening regulations on credit cards. According to the People's Bank of China, as of the end of last year, there were 9.913 billion bank cards in China, among which the number of credit cards and debit-credit cards stood at 727 million?a decrease of 5.14% compared to the same period the previous year.
The total amount of credit card delinquencies over six months reached 123.964 billion yuan (approximately 24 trillion won), an increase of 26%. Economic Daily reported that banks are focusing on managing "non-performing loan" risks as the number of credit cards decreases while delinquency amounts continue to rise.
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