Chinese commercial banks are taking action to curb the use of credit card cash advances for gold trading, following a surge in gold investment activities that has swept the nation. This development comes as state media highlight the rising trend of using credit cards to capitalize on fluctuating gold prices, with strategies widely shared on social media platforms.
According to the China Economic Daily, gold prices have recently reached unprecedented highs, enticing investors to seek arbitrage opportunities through credit card cash advances and consumer loans. In response, major banks such as Industrial Bank, Bank of Communications, Bank of Jiangsu, and China Guangfa Bank have issued warnings and implemented restrictions to prevent credit card funds from entering speculative investment areas, including gold and stocks.
These banks have cautioned that using cash advances for gold trading not only breaches card usage policies but also exposes cardholders to significant financial risks. If gold prices fluctuate unfavorably, investors may face hefty fees on borrowed funds, risk tarnishing their credit records, and potentially confront reduced credit limits or demands for early repayment from banks.
The crackdown aligns with broader efforts by Chinese financial authorities to tighten credit card regulations. The People's Bank of China reported a decline in the number of credit cards in circulation, alongside a substantial rise in overdue credit card debt. As of the end of last year, there were 9.913 billion bank cards in China, with credit and debit/credit cards totaling 727 million—a decrease of over 5% from the previous year. Meanwhile, six-month overdue credit card debt surged by 26% to 123.964 billion yuan.
This trend has prompted banks to focus on managing the risk of bad loans, as the number of credit cards dwindles but overdue amounts continue to climb. As the gold investment craze continues, financial institutions are taking a firm stance to mitigate potential fallout from reckless investment behavior.
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