Visa acts to promote responsible use of credit among customers
High unemployment, rising bankruptcies and heavy debts are giving rise to misconceptions about credit cards, according to Visa International.
'We should try to gradually help consumers manage their finances and try to reduce debt and bankruptcy in that way,' said Prudence Chan, Visa International's country manager for Hong Kong and Macau.
'The economy has not gone back up since 1997. Unemployment is still rising. In the past 18 months or so, delinquency and bankruptcy has been an issue. As a consequence, there is generally a misconception among consumers about credit cards - how they should be used, how people pay up and how compound interest works.'
Last year, a record 25,328 people in Hong Kong declared personal bankruptcy, more than doubling the figure for 2001. The banking industry's credit-card charge-off ratio reached 13.25 per cent, against just 5.46 per cent in 2001, according to the Hong Kong Monetary Authority.
Eighty-four per cent of consumers polled by Visa in the second half of last year ranked finances as a primary concern. The poll of 200 18 to 49-year-olds found 25 per cent said finance ranked alongside careers in order of importance, second only to family matters. But more than half said they 'did not know much' about basic financial skills such as how compound interest and home mortgages worked. The hardest part of everyday finances was 'saving money for a long-term goal' (35 per cent) and 'sticking to a budget' (22 per cent), the poll showed.
Half of those polled said they learned about managing money 'the hard way', with l6 per cent learning through word of mouth from parents and relatives.
Less than 10 per cent had received any formal financial education or had learned about managing money through banks or financial advisers.
'The consumer poll clearly demonstrates that, despite the considerable importance consumers place on their finances, they have knowledge gaps in basic financial concepts,' Ms Chan said.
The website covers topics from budgeting and saving to using credit and debit cards wisely, card security and identity theft. Calculators allow visitors to work out compound interest and set up budget plans.
Visa is hoping its consumer education policy in Hong Kong will eventually be used as a model in China, where credit knowledge is in its infancy.
Hong Kong is considered a mature market in terms of credit-card penetration, with more than three credit cards per person - a total of about 12 million. China on the other hand has less than a million internationally accepted credit cards in circulation. There are about 500 million payment cards in the country, 99 per cent of which are debit cards, meaning they work on a cash-only basis.
