According to figures from the Financial Supervisory Commission, three million of Taiwan's nine million-plus credit card holders have used revolving credit. As of the end of October 2005, financial institutes in Taiwan had approximately NT$500 billion in available revolving credit for credit cards and over NT$300 billion available for cash advance loans. Tack onto that small loans not made on cards and you have NT$1.4 trillion dollars in unsecured personal debt.

One-two punch

Some banks are selling the creditor's rights to the increasingly ubiquitous bad debts on the "twin cards" (credit cards and debit cards) to private collection agencies that stop at almost nothing, including harrassing debtors, their parents, and their children 24/7 and even using criminal syndicates to get the money. This makes life for debtors so unbearable that some find that the only way to put an end to it is to put an end to it all. Demands that banks exercise restraint and calls to save card slaves are becoming increasingly resonant throughout society.

It can be argued that people make decisions to swipe their credit cards and make cash advances of their own free will and that you can't blame the card issuers.

That might be true, but impulse buying by young people puts them at high risk of becoming enslaved to plastic cards, the potential consequences of which cannot be ignored. Figures from the National Youth Commission's debt help hotline, published at the end of December last year, indicate that callers under age 30 owed on average nearly NT$2 million to as many as ten banks. The major reason for the debts: excessive consumption.

The inability of cardholders to rein in their desire to shop until they drop is obviously the major reason for the massive debts, but by employing measures like giving away cards like they were candy and encouraging borrowing, banks are clearly accomplices in the card slave population explosion.

Soaring revolving interest rates on credit cards at 18-20% rake in NT$140-160 billion in profits for banks. There isn't a bank that doesn't do everything within its power to win a piece of this pie. More than NT$800 million is spent annually on advertising to promote borrowing. Advertisers have long been brainwashing the public with such mammonistic slogans as "Don't let the lack of money stand between you and your dreams," "George & Mary" (sounds like "borrow" and "interest-free" in Taiwanese), and "Classy people borrow money."

Prodded by banks, debts in Taiwan have increased at almost a tenfold rate over the past ten years. As of last September, both types of cards racked up a combined record high of NT$803.5 billion--an average of NT$20,000 per credit card and NT$80,000 per debit card. Furthermore, 400,000 people, owing an average of NT$600,000, maxed out their credit cards and have become prey for collection agencies. 50,000-plus declare bankruptcy each month.

Debts paid in blood

Pressured by calls from all quarters to emancipate card slaves, a bill was proposed in the Legislative Yuan last November which would have capped revolving interest rates on credit cards at 10%. This threat almost sent financial stocks crashing. The Bankers Association showed goodwill by proposing a new debt negotiation mechanism in mid-December. In addition to offering an assistance hotline, the association plans to set up a commission to handle debt negotiations for unsecured personal loans through a one-stop window by April of this year.

Wang Jen-hung, chairman of the Bankers Association Credit Card Committee, explains that individuals unable to pay off their debts due to incapacitation, serious illness, low income, or unforeseen circumstances can do so over a maximum ten years at rates as low as 0%. The names of cardholders that utilize the debt negotiation mechanism, however, will be immediately entered into the Joint Credit Information Center's database and the cardholders will be treated like the plague by banks for the next decade.

In order to avoid cardholder insolvency due to overspending the Bankers Association passed a resolution requiring that minimum payments due on credit cards be raised from the current 2-5% of the balance to 10%. This new policy will be implemented as early as March. Furthermore, effective immediately, creditor's rights on credit and debit cards that fall into arrears can no longer be sold to asset management companies, a.k.a. collection agencies.

To protect themselves, banks have been implementing a number of retrenching measures aimed at abnormal accounts, including refusing to extend expired debit cards, only allowing cardholders to pay off but not borrow more money on debit cards, and reducing credit limits. Debit card applications have entered an "Ice Age." Numbers for newly approved debit cards plummeted by 80% in January and are expected to fall below 10% of previous levels.

To encourage negotiations between debtors and banks, private organizations, like the Alliance of Fairness and Justice and the Partime 95 Alliance, recently formed the Card Debtors Self-Help Association with a legal team of 65 attorneys who plan to carry out collective talks with banks concerning debt payments. Meanwhile, the Association is planning boycotts and even sitdown protests in front of banks that employ violence or refuse to enter negotiations, in hopes of paralyzing their business.

The Judicial Yuan is also preparing to propose a chapter on clearing consumer debt for insertion into the Bankruptcy Law to rescue private individuals saddled with card or home loan debts. With intervention from judges, individuals trying to pay off their debts in good faith can request that the court invoke the "New Life Program" to defer home loans or provide cardholders with favorable terms that allow them to pay off loans in stages, thereby giving them a second shot at life.

Debts must be paid back, but enticing people into borrowing money, then hounding them to death to get it back goes against the principles of fairness and justice upon which this society should be based.