Warnings on hidden costs of Hong Kong's credit card craze
As the Christmas spending frenzy reaches its peak, Hongkongers will be flashing, swiping and debiting almost 18 million credit cards - about three cards for every adult in the city.
But before hitting the stores, shoppers would do well to think about how much their plastic pleasure spree could cost if not settled on time.
In the first 11 months of this year, the Consumer Council received 406 complaints about credit card services, 43 per cent more than the same period last year. The biggest rise in complaints related to disputes about charges, up by 73 per cent to 254.
The surge corresponds with the continued growth in the number of credit cards in use and the popularity of cash advances. According to Hong Kong Monetary Authority's statistics in the third quarter of this year, the almost 18 million credit cards in circulation was an increase of 4.2 per cent year on year.
The value of credit card transactions edged up 9 per cent in the quarter, as compared with a year ago, to HK$124.2 billion.
Cash advances grew at a quicker pace than retail sales. Bills for shopping rose 7.6 per cent to HK$114.9 billion, while cash advances were up 31 per cent to HK$9.3 billion.
The authority advises consumers to consider their needs to avoid overspending on cards. They should also examine the terms and conditions, including their credit limit, the interest-free repayment period, minimum payments and other charges.
Professor Leo Sin Yat-ming of Chinese University's department of marketing, said young people today used more credit cards.
"There is a danger that they will use cash advances from one credit card to cover another card's outstanding payments and the total amount will snowball," he warned.
However, statistics show most credit card users are able to keep up with payments.
In the third quarter, credit card bills totalled HK$107.7 billion, while payments overdue for more than 180 days or money owed by credit card users who declared bankruptcy stood at HK$561 million, about the same as the second quarter.
A Rising Trend
Number of credit cards in circulation in Hong Kong
2010: 15.5 million
2011: 16.5 million
2012: 17.4 million
2013: 18 million (third quarter)
Source: Monetary Authority
Number of complaints against credit card companies
2013: 406 (first 11 months)
Source: Consumer Council
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