Young People Fleeing Credit Cards: A Full Analysis of Legal Risks in Bank Debt Collection and Credit Record Repair

Introduction: Why are credit cards no longer favored by young people?

Recently, a news story about “credit cards no longer cashing in on young Chinese consumers” sparked heated discussion. According to the People's Bank of China's “2024 Overall Operation of the Payment System,” the number of credit cards and combined credit and debit cards issued has declined for two consecutive years. By the end of 2024, a total of 727 million credit cards had been issued nationwide, down 1.6% year-on-year. Meanwhile, internet consumer credit products such as Huabei, Jiebei, and JD Baitiao continue to expand. Young people are “voting with their feet,” turning away from traditional credit cards.

Behind this phenomenon lies not only a shift in consumption habits, but also legal disputes in the credit card industry over fee transparency, debt collection compliance, credit repair, and other issues. As a lawyer who has long handled financial loan disputes, I believe this is both a result of market choices and an inevitable exposure of legal risks. This article will analyze, from a lawyer's perspective, the legal issues behind young people "fleeing" credit cards, and provide practical advice for cardholders and banks.

1. Nontransparent Interest and Fees: Where Is the Legal Boundary for Credit Card "Compound Interest"?

Many young people refuse credit cards out of fear of exorbitant interest rates and hidden fees. In practice, credit card overdraft interest is calculated at 0.05% per day, which translates to an annualized rate as high as 18.25%. If repayment is overdue, compound interest and penalty charges are also incurred. A previous case showed that a cardholder who overdrew 20,000 yuan saw the principal and interest balloon to nearly 70,000 yuan after three years of delinquency, sparking public outcry.

Legally, credit card interest and fees are not unconstrained. According to Article 55 of the Measures for the Supervision and Administration of Commercial Bank Credit Card Business, issuing banks shall provide cardholders with statements that clearly set out the calculation methods for interest, compound interest, fees, and other charges. However, some banks use complex formulas in cardholder agreements and even impose "full-balance penalty interest" clauses, whereby if a cardholder fails to repay the entire outstanding balance, interest is calculated on the full amount of purchases rather than on the unpaid portion.

In 2021, the Supreme People's Court issued the "Provisions on Several Issues Concerning the Trial of Civil Disputes over Bank Cards," which explicitly prohibits full penalty interest. Article 2 of the Provisions states that where the total of interest, compound interest, liquidated damages, and other fees claimed by the card-issuing bank exceeds an annual interest rate of 24%, the court will not support such claims. This means that if a bank charges excessive interest and fees, the cardholder has the right to request a reduction in accordance with the law.

As a lawyer, I advise cardholders to carefully review their statements and calculate the actual annualized interest rate. If a bank is found to have violated the cap regulations, complaints may be lodged with the CBIRC, or the aforementioned judicial interpretation may be invoked as a defense directly in litigation. At the same time, banks should also proactively improve the disclosure of interest and fees to avoid mass litigation caused by obscure terms.

II. Violent Debt Collection and Personal Information Leakage: How to Maintain Legal Boundaries?

After a credit card becomes overdue, debt collection is the primary method banks use to recover outstanding amounts, yet in practice, "violent collection" occurs frequently. The "escape" of young people mentioned in the news is partly due to their fear of collection harassment. Common violations include: frequent phone bombardment, contacting the cardholder's relatives and friends, making door-to-door threats, and even forging lawyer's letters or court summonses.

Legally, debt collection practices are strictly regulated. Article 68 of the "Measures for the Supervision and Administration of Credit Card Business of Commercial Banks" clearly requires that card-issuing banks shall adopt lawful collection methods, shall not collect debts from third parties unrelated to the debt, and shall not use improper means such as threats or intimidation. In addition, Article 293-1 of the "Criminal Law" stipulates the "crime of collecting illegal debts"; if debt collection involves violence, coercion, intimidation, or other means and the circumstances are serious, it may constitute a criminal offense.

Personal information protection is equally critical. Information obtained during debt collection, such as contact lists and home addresses, is protected under the Personal Information Protection Law. If banks or outsourced collection agencies illegally collect or use such information, they will face administrative penalties and civil compensation. In 2024, a major bank was fined millions of yuan for leaking customer information through outsourced collection, which serves as a warning.

Lawyer's advice: When facing debt collection, cardholders should preserve evidence such as call recordings and SMS screenshots. If threatened or if privacy is leaked, they can immediately report to the police or file a complaint with financial regulatory authorities. Banks, on the other hand, must strictly screen collection partner agencies, clearly define compliance boundaries, and avoid bearing joint liability for third-party actions.

III. Credit Repair Traps: Criminal Risks for Young People "Cleaning Up" Their Credit Records

Credit records are the core constraint on credit card usage; once an overdue payment occurs, the negative record will be retained for five years. In the news, young people are "fleeing" credit cards, partly out of fear that their credit records will be damaged. However, "credit repair" intermediaries have emerged in the market, claiming they can delete overdue records for a fee, which is precisely a legal trap.

Pursuant to Article 16 of the Regulations on the Administration of the Credit Reporting Industry, the retention period for negative personal information held by credit reporting agencies is five years, and such information shall be deleted after more than five years. However, "repair" is not equivalent to "alteration"; objections may only be filed where the information is erroneous or omitted. In practice, intermediaries often employ means such as forging official seals or providing false supporting documents to submit fraudulent objections to banks, which not only fails to succeed but may also constitute a crime.

Article 280-1 of the Criminal Law stipulates that the use of forged or altered official documents, certificates, or certification documents, where circumstances are serious, may result in imprisonment of up to three years. In addition, the Public Security Administration Punishments Law also provides for corresponding penalties. In 2025, a court in a certain region pronounced judgment in a "credit repair" fraud case, in which the defendant defrauded dozens of victims of a total of 500,000 yuan under the pretext of repairing credit records, and was ultimately sentenced to six years' imprisonment for fraud.

As a lawyer, I especially want to remind young people: your credit record is a lifelong "economic ID card" — do not trust "credit repair" advertisements. If you have any objection to your record, you should file a dispute application through the official channels with the People's Bank of China or your bank, free of charge. Banks should also strengthen the review of dispute applications to prevent false materials from entering the system, while cooperating with law enforcement to crack down on credit repair fraud.

IV. From "Escape" to "Return": The Path of Legal Balance Between Banks and Cardholders

Young people moving away from credit cards does not signify a failure of the credit card system, but rather raises higher demands for banking services. From a legal perspective, banks need to strike a balance between compliance and profitability. Currently, some banks have introduced "cooling-off period" services, allowing cardholders to cancel within a specified period after card issuance, and have simplified fee explanations—these are positive signals.

For cardholders, lawyers advise: First, consume rationally and live within your means, avoiding excessive reliance on credit overdrafts. Second, if you encounter financial difficulties, proactively negotiate with the bank for installment payments or suspension of interest accrual. Pursuant to Article 70 of the "Commercial Bank Credit Card Business Supervision and Administration Measures," cardholders may reach an individualized installment repayment agreement with the bank, with a maximum term of five years. Third, retain all transaction receipts, as they can serve as evidence in the event of a dispute.

Banks, for their part, need to strengthen compliance review, particularly in high-risk areas such as debt collection outsourcing and interest/fee setting, and establish internal risk control mechanisms. At the same time, they should actively use legal means to recover debts, such as resolving disputes through litigation or arbitration, rather than relying on gray-area collection practices.

As lawyers at Guangdong Zhiming Law Firm, we have handled numerous credit card dispute cases, including interest and fee disputes, collection infringement, and credit report objections, accumulating extensive practical experience. If you or your business are facing related legal issues, you are welcome to consult us. We will provide you with professional solutions.

The "ebb tide" of credit cards is both a market choice and a victory for legal rules. Only when both banks and cardholders respect the law can the credit system develop healthily.