BANKS in Shanghai racked up growing interest income on credit cards as consumers are more willing to roll over payments.

Interest income from credit cards gained 56.8 percent to 43.29 million yuan (US$5.64 million) in the first quarter, the Shanghai Bureau of the China Banking Regulatory Commission said yesterday in a statement.

The rise indicated that card holders are more willing to purchase expensive items and carry a balance, said an official with the regulator.

The official declined to comment whether the rising interest is related to the booming stock market as some card holders said they leverage the credit card's lending function to invest in shares.

"These days, I always pay the minimum payment required by lenders and save the remaining payment for investment in the stock market," said a white-collar worker surnamed Jiang. "I made such decision after I calculated that the returns on my stock investment are higher than the interest rate on the credit card."

The Shanghai Composite Index has gained 52 percent this year.

Credit cards will be the most important consumer credit product after mortgages, with profit jumping to US$1.6 billion by 2013, or 22 percent of total credit profits from consumers, New York-based McKinsey & Consulting firm said earlier.

When credit cards debuted in China, the concern was that card holders would seldom carry a balance due to people's tendency to save money, therefore not giving banks a chance to earn money from interest charges.

Banks benefit in several ways from credit cards - interest payments when card holders carry a balance, annual fees and charges from merchants when a credit card transaction is made.

In the first quarter, bank card-based transactions rose 68.1 percent to 41.94 billion yuan. More than 50.66 million bank cards, including debit and credit cards, have been issued in Shanghai by the end of March, up 4.6 percent from a year ago, the local regulator said.

"Bank card transactions grew quicker than that of the card number growth, which means a more frequent use of cards," the statement said.