A report issued by 51 Credit.com and Analysys International shows that only 20 to 40 percent of the credit cards issued are put into use with a large amount of cards "sleeping".

For one reason, a traditional conservative spending culture is making the credit card business in China much harder. "Chinese feel more comfortable with the practice of spending the money they really own," the McKinsey report points out.

It says that 94 percent of credit card holders pay off the balance of their cards before they have to make any interest payments. "The interest rate is so high, there is no need to pay any extra money," Zheng Fei, a newspaper editor tells China Business Weekly. Zheng pays his debt regularly before the monthly deadline.

On the other side, though people have accepted the use of credit cards, the environment for their use is not well established. Although one can always use credit cards in big shopping malls and restaurants, credit card readers are seldom found in markets. Many also find it frustrating visiting shops that do not have card-reading machines, and have to walk a fair distance to find an ATM.

Despite these challenges, the Chinese credit card market presents enormous potential for profits for both local and foreign financial institutions. With continued robust consumer spending, a growing outbound tourism market and the desire for new life-style experiences, the urban acceptance and penetration rates of credit card usage will continue to grow.