Refinancing and short credit card transactions: A dangerous trick

The State Bank has repeatedly warned about short credit card transactions. Photo: ST

“Short” transactions

According to banks’ regulations, credit cards are only exempt from interest for 45 days if they are used to pay directly when buying products. If the above time limit is exceeded, customers will be charged the overdue interest rate and the penalty fee. Besides, if cashing out at ATMs from a credit card, cardholders will lose a fee of 3-4% of the total value of each withdrawal plus an interest rate of 2-3% per month and only 50% credit card limit can be withdrawn.

With such provisions, credit cardholders don’t want to let their debts be overdue. Therefore, many people have circumvented the rules via credit card repayment or cash withdrawal services.

Talking about this, a credit cardholder said due to lack of money to repay the credit card which is about to be overdue, he learned about a card maturity service. The credit card maturity service provider will recharge the cardholder's account to repay the bank debt, but as soon as the bank reissues the new monthly credit limit to the cardholder, the service provider will swipe the card through a payment machine (POS) to collect the debt plus a fee that is much lower than the interest rate penalty of the bank.

Similarly, regarding withdrawing cash from a credit card, by typing a few keywords on Facebook and Zalo, customers can get a series of private and public pages and groups providing this service. According to an advertisement on a Facebook page, the service provider will support cash withdrawals for a fee of only 1.6-1.8% of the total value of each withdrawal, and even support withdrawal services for international credit cards like VISA, Master Card and JCB with a fee of only about 2-2.5%. The withdrawal limit is the entire amount in the card.

This service is booming at the end of the year. There has been a competition for fees among service providers, leading to many organisations and individuals hiring services to run ads on social networks and Google. Customers are easy to find and are consulted, done the service well and quickly.

Risk of bad debt and legal violation

With the policy of promoting non-cash payments, the universalisation and enhancement of card payments to people is essential. However, the variables and tricks mentioned above are extremely dangerous for users and the payment system as well as banking in general.

Many experts have said credit card users conducting maturity and withdraw cash are at risk of revealing personal information, leading to bad people taking advantage of "hacking" accounts and credit cards to get money, because when performing the credit card maturity service, service providers keep the customer's card and ID to complete the payment. They can take advantage of installing malicious code on customer's phone to steal the OTP. Furthermore, maturities and withdrawals of cash from a credit card without going through a bank are illegal and non-transparent. Customers using this service can lose money and be sanctioned by the authorities.

With such dangers, the State Bank has repeatedly warned about this issue. At the beginning of 2021, the Governor of the Bank issued Directive No.02/CT-NHNN on enhancing the prevention and fight against legal violations in banking card operations.

In which, the governor requested to prevent using credit card limit to transfer money, credit to checking account, debit card or prepaid card of customers or third parties; and short payment transactions at merchants - no purchase or sale of goods and service provision for cash withdrawal. Prevent card transactions that are not in compliance with regulations related to prize-winning games, gambling, betting, trading foreign exchange, securities, virtual money and e-money. Credit institutions should advise and warn customers not to use or help others to take advantage of the use of payment accounts, bank cards for illegal purposes, such as leasing or lending spend accounts, buying, selling, renting, leasing cards or card information and opening for someone else's card.