As the U.S. grapples with soaring gas prices, many pundits have put the blame for the rise on the shoulders of the frenetically expanding economies in China and India. There’s just too much demand and the market can’t keep up, they say.
Want proof of just how fast that Chinese economy is growing? Try this: The total number of credit cards in China nearly doubled in the past year, according to the People’s Bank of China, which is the nation’s central bank.
A recent report at ShanghaiDaily.com laid out the details: “China had more than 104.73 million credit cards in circulation at the end of March, up 92.9 percent since a year ago.”
The report goes on to say that “China’s total bank cards, including debit and credit cards, topped 1.58 billion by March 31, up 29.1 percent over the year.”
As those numbers indicate, debit cards are far and away the most popular choice of plastic. They make up 93 percent of the card market. Still, a near doubling of the number of credit cards in the world’s most populous country is an event that is sure to draw attention, especially as companies from around the world race to do business in China.
This growth coincides with a spending boom in India, the world’s second-most populous country. WashingtonPost.com has a fascinating article about buying habits of the 20- and 30-somethings in India. The article says younger Indians are charging items like flat-screen TVs, iPods and sunglasses in ever-growing numbers.
The big problem in India: huge interest rates. According to the Washington Post, “In India, even the lowest credit card interest rates hover around 20 percent, and the average lending rate is 34 percent, which includes a 12 percent service tax on the interest.” Yikes! That’s more than two times the average lending rate for cards in the U.S., according to CreditCards.com’s latest rate report. Add on the Indian government’s “service tax” on the interest, and those rates for consumers in India become downright outrageous.
The prevailing thought seems to be that this Asian growth isn’t going to stop anytime soon. Can it continue at the breakneck pace that we’re seeing now? Nah. Growth like this never lasts forever, especially when it may be creating a generation of folks buried in debt with 34 percent APRs. It certainly bears watching, though, as Americans deal with their own credit card burden.