Everything you need to know about credit cards and how to NOT end in debt

With great power comes great responsibility. A credit card gives you financial freedom, but it’s important that you use it sensibly

Wong Tsui-kai |

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Personal finance and dealing with money are important skills that can be confusing, no matter how old you are. And for someone about to step into the wider world, whether university or the workforce, the heady rush of making or having your own money can be a lot to deal with.

So Young Post spoke to Murine Tsien, Senior Vice President and Head of Channel and Wealth Management at a major Hong Kong bank for some essential advice on one of the most useful yet dangerous tools today: the credit card.

First things first – a credit card is not free money! It’s a form of debt, and debt is a big deal.

There is no such thing as free money. (If you can prove we’re wrong, please write in and tell us.) A credit card is based on a promise to pay back what you owe later. Spend now, pay later. The keyword here being later. You’ll have to pay it back eventually, so don’t spend more than you can afford.

How to apply

Assuming you don’t have a bank account, you’ll need one of those first. After that, you’ll usually give the credit card issuer some details.

  1. You will be asked whether you have a job, and if you do, how much you earn: they need to be sure you can pay the credit bills.
  2. You can prove this by asking your employer for a letter which states your position and salary. Or, if you have been working there for more than a month, you can prove your income by showing your bank statement or salary slip.
  3. You will also be asked to prove your address (so that they know where to find you and send the bill). You can do this with a phone bill or other letter that is sent to your address from a reputable company such as a bank.
  4. Next, you can fill out the paperwork and apply for a card.
  5. If you don’t have a job, you might need your parents’ proof of address instead. Alternatively, some banks offer a “piggyback” option, where you can become an authorised user on your parent’s card. This wouldn’t be your own credit card, but it can be a safer option, as your parents can watch how much you’re spending and help you budget.

In Hong Kong, credit cards are paid monthly. If, at the end of the month, you can’t pay off everything you’ve spent, you can make a minimum payment. However, this minimum includes interest, which is a high percentage of what you spent. It’s better to focus on not spending so much in the first place instead, and limiting the amount you owe the bank.

Pros and cons

A credit card gives you independence, which feels great. As does the convenience it offers; whether buying something in person or online, you can just take your card out and pay.

But on the flip side, making it so easy to spend can make it hard for a newcomer to manage their finances properly. It’s easy to accidentally overspend, and hard to keep track of how much you’ve spent until you see the bill.


Some banks are very confusing when it comes to extra charges. Make sure you check the interest rates (anything up to 20 per cent is considered fair) and handling charge, and always, always read everything you sign.

Apply for a credit card from a bank, not a financial institution. Financial institutions tend to offer fewer rewards, and there can be more hoops to jump through to get approval.

Online shopping

Be careful when buying things from small online shops. It’s not their fault, but their systems can be weak, which makes it easy for other people to steal credit card information. Try to shop on trusted websites that offer secure payment methods.

General advice

Until you’re an expert at managing your finances, only apply for one credit card. There are a few reasons for this.

  • First, looking after your money is confusing at first; a wallet full of credit cards makes things even more overwhelming.
  • Second, if your cards are stolen, it takes a while to cancel them, and it can be tricky to get refunds if someone else uses them.

Remember to keep your card safe; it’s your responsibility not to lose it. On that note, don’t lend it to anyone. Banks have regulations on this, and if they discover you broke those rules, they won’t help if something goes wrong, and might even charge you.

Banks want you to use your credit card, because it will make them money, so they may increase your credit limit; but that makes people more likely to overspend. To avoid that:

  • Don’t apply for credit limits you can’t afford.
  • Don’t see your credit limit as free money.

A credit card is a tool. The key to using one is to be smart about it and disciplined. Keep your cool, don’t overspend and don’t waste money. Happy adulting!