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SCMP Reporter

AN EXPERT has warned that poor financial vetting is allowing people to run up spiralling credit card debts in Hong Kong.

  Bobby Rozario said financial institutions in the territory were not exchanging enough information about customers' card payments, and there was no credit bureau in the territory to examine properly people's creditworthiness.

  It meant those with large debts with one company were still able to get credit cards from rival firms, and then continue their spending unchecked.

  Mr Rozario is customer service and product development director at international collection agency Dun and Bradstreet Information Services.

  He said: 'If you owe money on a credit card in Canada or in Britain it will be on the records of the credit bureau, making it difficult to get a loan or another credit card.

  'But if a customer has an outstanding credit card debt with one bank in Hong Kong they can easily apply for a new card from another bank.

  'There is a loophole in Hong Kong and people know they can get away with a long line of credit debts.'    Mr Rozario said, in extreme cases, people who ran up big debts on their old credit cards applied for a new one in an attempt to repay existing bills.

  He added that the ease with which they would be obtained, as well as the debt problems they had created, had changed the perception of credit cards in Hong Kong.

  'Having lots of credit cards in your wallet in the 1970s or the 1980s meant you were a reliable customer, but today it means just the opposite.'   Mr Rozario also dismissed the view that people in the territory usually paid off credit card bills promptly.

  'It's not true to say that more credit card holders in Hong Kong pay off their monthly balance than elsewhere,' he said.

  'In fact, most people in Hong Kong only make the minimum payment, which still allows them to continue using the card.'   Mr Rozario said a credit bureau would do much to stamp out credit card debt in the territory.

  Statistics gathered by Credit Information Service, a small credit company which pools debt information for a number of finance houses and banks, shows the number of personal bad debt cases is increasing in Hong Kong.

  But general manager Judy Ma said it was too soon to draw accurate conclusions.

  'People are getting more credit cards but banks are responsible because they have very aggressive marketing campaigns which frequently target young consumers.'   Sunny Cheung, general manager of Citibank's card products centre, said the level of debt varied according to the customer profiles targeted by different banks.

  'Young people in their first job often find it difficult not to have a revolving balance whereas older clients may only have a revolving balance on some occasions,' he said.

  Mr Cheung said Citibank monitored credit debts, but data gathered so far had not shown an increase in debt levels or more revolving credit balances.

  This month Citibank introduced a new service designed to help customers keep track of their credit card spending.

  Along with their monthly statements, the bank's preferred customers were sent a summary detailing annual spending patterns.

  The transaction summary enables gold card, Visa and Mastercard holders to track annual spending areas and to plan their personal finances more efficiently.

  Customers who receive the statement can see at a glance how much they spent on travelling, airlines, hotels, or at department stores, restaurants and even in jewellery shops in the previous 12 months.

  'The year-end summary groups credit card transactions together, and allows our customers to see where they are spending money,' Mr Cheung said.

  The response to the new summaries from the banks customers had so far been encouraging. 'Few people have time to calculate their annual expenses and the final statement holds a few surprises,' he said.

  Christmas and the Lunar New Year traditionally represent the most lucrative consumer spending periods for retailers in the territory.

  Charge card company American Express said it would not know until next month whether or not debt levels had increased significantly over the Christmas and new year period.

  Citing intense competition, Hongkong Bank declined to reveal details of its credit card records in the aftermath of Christmas.

  But Standard Chartered Bank said it had not experienced an increase in revolving balance payments, where customers pay only part of their monthly bill.

   The bank also said there had been no rise in the number of unpaid credit card debts over the Christmas period for the past three years.



Warning on credit debt