Keywords: credit card disputes, standard terms, overdraft interest fees, liquidated damages.
Subject matter: Credit card dispute.
[gist].
If the card issuer fails to prompt or explain the standard terms of interest, compound interest, fees, liquidated damages, etc. in the credit card contract in accordance with the regulations, resulting in the cardholder's lack of awareness or understanding of the clause, and asserts that the clause is not part of the contract and is not binding, the court will uphold the cardholder's claim.
If the Issuer requires the Cardholder to pay overdraft interest, compound interest, liquidated damages, etc., or to pay installment fees, interest, liquidated damages, etc., in accordance with the credit card contract, and the Cardholder believes that the total amount required by the Issuer is too high and requires an appropriate reduction, the court will make a judgment based on the principles of fairness and good faith, taking into account the relevant national financial regulatory provisions, the amount and time limit of the outstanding repayment, the degree of fault of the parties, the actual losses of the Issuer, and other factors.
Facts
The plaintiff, a branch of China Nongye Bank Co., Ltd., sued Li to repay the principal, interest, liquidated damages, handling fees and other expenses of the overdraft loan on the grounds that the defendant Li violated the provisions of the Jin Sui credit card collection contract. Defendant Li had no objection to the principal of the loan, but had doubts about the calculation of interest, liquidated damages, and handling fees.
After the trial, it was ascertained that Li had fully understood and clearly understood the relevant information of the credit card product when applying for the Jinsui credit card, and was willing to abide by the rules of the contract agreement. The interest shall be calculated at a daily interest rate of 5/10,000 after the expiration of the interest-free period in accordance with the terms and conditions of the credit card. The penalty is 5% of the minimum repayment amount, and the handling fee is 1% of the cash withdrawal fee and the cash instalment fee.
As of February 8, 2021, Li's overdraft loan principal, interest, liquidated damages, handling fees, etc., totaled 103 806$34, which should be repaid in accordance with the provisions of the contract. Considering Li's current financial situation, the court decided to grant a certain interest reduction when executing the repayment.
The litigation costs of this case shall be borne by the defendant Li.
The court held that
The effective judgment of the court confirmed that the contract for the use of the plaintiff's China Nongye Bank Jin Sui credit card was an expression of the true intention of the parties, complied with relevant laws and regulations, and was legal and valid. The defendant violated the agreement and failed to repay the principal of the credit card loan in full on time, so the court upheld the plaintiff's claim for the defendant to repay the principal of the corresponding credit card loan. According to the court's ruling, the total amount of loan interest, liquidated damages, and handling fees shall not exceed the limit of 24% per annum.
Case Analysis
This case is a credit card dispute case. Credit card disputes are disputes over the rights and obligations of commercial banks, credit card holders, special merchants, actual cashiers or cardholders in the process of issuing and using credit cards. As far as the issuing bank and the cardholder are concerned, when the cardholder's credit card account is insufficient to pay the amount of cash withdrawn or consumed, the legal relationship between the two parties with respect to the part of the amount that is insufficient to pay is actually a financial loan contractual relationship.
Provisions of the Supreme People's Republic of China on Several Issues Concerning the Trial of Bank Card Civil Dispute Cases (hereinafter referred to as the "Bank Card Provisions", effective as May 25, 2021). The bank card contract is a standard contract, and the interest and liquidated damages clause is a standard clause.
In the practice of bank cards, when introducing credit cards to cardholders, the staff of some card issuers often only emphasize the preferential benefits such as the interest-free period and minimum repayment amount of the credit card, but avoid the problems of overdue interest, compound interest and liquidated damages will be charged for overdue repayment of credit cards, or only emphasize that credit cards with installment payments will not charge interest, but do not inform the cardholder that the installment payment will be charged on time and liquidated damages will be charged for late payment. This practice leaves cardholders in the dark, unable to understand how interest and liquidated damages are charged, or how the annual interest rate of credit card overdraft transactions is much higher than that of ordinary financial loans. Without knowing this important information, many cardholders sign a credit card contract and receive a credit card without being fully informed.