Consumer protection in Hong Kong

Beware of complex cash rebates and reward points on credit cards, Hong Kong consumer watchdog warns

  • Consumer Council urges card issuers to be clearer on conditions after finding most plans contain convoluted calculating mechanisms
  • Taiwan most popular destination for rebates on overseas card spending
PUBLISHED : Monday, 17 December, 2018, 6:03pm
UPDATED : Monday, 17 December, 2018, 9:04pm

Shoppers should not blindly pursue credit card rewards by racking up huge bills as the calculations for such perks are complicated, Hong Kong’s consumer watchdog has warned.

On Monday, the Consumer Council said convoluted cash rebate plans also made it difficult for users to make informed decisions when choosing a card, with rewards varying widely across plans.

The watchdog made the comments after analysing 19 card issuers and 38 cash rebate plans in the city.

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It found that rebates differed greatly between cards – for a HK$1 cashback reward, for example, holders of one of the cards only needed to spend HK$50, but to get the same rebate on another card, they had to spend HK$450. However, this was muddied up with other conditions.

Factors that influenced rebate values included the type of shops at which the cards were used, the amount of rebate sought at a given time, and even the currency or global region in which the purchases were made.

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The council advised consumers to pay closer attention to the variations and how their own finances would be affected.

“Consumers should choose the card that best suits their individual consumption pattern, instead of blindly pursuing rewards through excessive spending, which might far outweigh the benefits,” said Clement Chan Kam-wing, chairman of the council’s publicity and community relations committee.

Consumers should choose the card that best suits their individual consumption pattern
Clement Chan, Consumer Council

But to make such choices, credit card companies and banks had to “clearly provide the calculation method when they launch their offers”, Chan said.

This was especially true for plans in which purchases were converted into reward points and then into a cash rebate, as opposed to a direct rebate for the dollar amount.

However, reward-point plans offered more flexible options for consumers, the council found.

For plans that rewarded more heavily for money spent overseas, Taiwan was the favoured destination. In some cases, shoppers could receive HK$1 for every HK$11 spent in Taiwan on average.

But Chan warned consumers against frivolous spending overseas for the sake of rewards, while “ignoring the other fees and charges involved”.

Currency conversion rates and the handling charges from the card company, which could eat into the value of rewards, should also be considered, he said.

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Other issues, according to Chan, included minimum purchase amounts, expiry dates for rebate periods and annual fees, all of which could affect a consumer’s bottom line.

Cardholders needed to familiarise themselves with such limitations to ensure they maximise their benefits and avoid applying for cards “just to earn extra rewards”, the council said.