Concerns about Paying Bills Rise During Latest Spike in COVID-19 Cases
- Latest TransUnion research shows that amidst the most recent spike in COVID-19 infections in Hong Kong, consumers are being impacted by rising unemployment, reduced working hours and increased concerns about paying bills
- Nearly two-thirds of impacted consumers have reached out to financial institutions to discuss payment options, a significant increase since the research began in Hong Kong in March
- Respondents have become increasingly credit-aware after months of financial hardship
TransUnion (NYSE: TRU) today announced the latest update to its Hong Kong Financial Hardship Survey. In the context of the recent spike in COVID-19 cases in Hong Kong, more consumers’ household incomes have been negatively impacted. They are also experiencing the most challenging employment conditions to date. Among all generations, Gen Z consumers (those aged 18-25 years) reported the highest level of impact on household incomes and employment, as compared to the last wave of the survey (end of June).
TransUnion has been polling consumers around the world on the financial impact of COVID-19 since March. This is the sixth wave of the Hong Kong survey, which polled 1,006 adults during the week of July 27. This survey occurred at a time when cases of local infections had been rising in the city, and government departments maintained strict measurements to contain the spread – including banning dine-ins at restaurants.
Negative Impact on Consumer Financial Health
The latest survey results show that the impact of the pandemic on consumer income and employment conditions had worsened. Compared to the previous wave of the survey, the percentage of consumers who stated that their household incomes had been impacted by COVID-19 increased by three percentage points, from 68% to 71%. The greater impact on consumers can be explained by a five-percentage point increase in the number of people reporting reduced working hours due to COVID – up from 55% in the prior survey to 60% in the latest wave of the study. A similar increase was reported by consumers who had lost their jobs. 21% said they had lost their jobs – a five-percentage point increase since the last wave (16%).
Among all generations, Gen Z respondents (consumers born in 1995 or later) reported the greatest shift in negative impact on household incomes, increasing by nine percentage points from 61% to 70% since late June. This can be explained by a greater percentage (24%) of Gen Z respondents indicating they had lost their job, which was up significantly from the previous survey (15%).
An increased impact on consumers’ financial condition would imply a greater concern regarding their ability to meet payment obligations. Since the previous survey, a larger percentage of impacted consumers (79%, up from 74%) have reported concerns about being able to pay their bills. Almost half (45%) of the impacted consumers felt they would be unable to pay within four weeks’ time, which was a marked 10 percentage points increase since late June. Credit card bills (42%) were the biggest concern for repayment, followed by rental payments and personal loans (both 34%), insurance (31%), and mortgages (26%) – a sequence in line with the previous observations. The proportion of consumers estimating large shortfalls of at least HKD16,000 doubled, from 17% to 34% in the recent survey.
“Our latest survey shows that Hong Kong consumers’ financial hardship has been exacerbated by the recent spike in infections, with a worsening impact on consumer income and employment.” said Francis Lau, director of research and consulting, Asia Pacific, TransUnion. “This will be especially challenging for the youngest generation, Gen Z, who are experiencing severe financial hardship at the very beginning of their careers. They will likely feel the impact of the pandemic for many years to come.”
Increasing Number of Consumers Seek Financial Guidance to Alleviate Distress
During these difficult times, it is important that consumers are aware of the significance of self-credit management and seeking proactive help from financial institutions to discuss payment options. The recent survey indicates that a larger proportion (89%) of financially impacted respondents (up from 86% in the last survey) found self-credit monitoring an important mechanism during the pandemic, and more respondents now know their credit score. The percentage of respondents who did not know their credit score decreased from 42% to 32% in the latest survey.
Impacted consumers who had proactively enquired about payment options increased by 10 percentage points since the last survey. The majority of consumers (68%) had received guidance from at least some of the companies they have accounts with. As a result, 40% of respondents have received some form of financial accommodation, a 14 percentage point increase over the previous survey (26%).
“Over the past few months, we’ve gradually seen increased collaboration between consumers and financial institutions to come up with solutions to alleviate financial hardship together. There has been a 15 percentage point rise in overall consumer willingness to discuss payment options since the first round of the survey we conducted in March, suggesting that consumers are taking a proactive approach to managing their financial challenges,” says Marie Claire Lim Moore, CEO, Hong Kong, TransUnion. “Similarly, more institutions have provided financial accommodation to consumers, showing that the battle towards financial recovery is being fought side by side. The pandemic may have brought about significant pressures, but the impact can be minimized through effective credit education that empowers people to understand and take charge of their finances.”
TransUnion’s research and credit education tools are being updated regularly on its COVID-19 website as the company continues to support consumers and businesses around the globe. Businesses interested in learning how to navigate the impacts of COVID-19 can gain insights from TransUnion webinars, here.