Consumer Concerns About Paying Bills Increase Amidst Continued Negative Impact on Household Income
- One year into the pandemic, 78% of consumers’ household incomes have been negatively impacted, and most expect the impact will continue
- Hong Kong consumers have become increasingly-credit aware and pragmatic, seeing savings and cutting discretionary spending as essential to cope with unexpected events or setbacks
TransUnion (NYSE: TRU) today announced its latest Consumer Pulse Study, reflecting the financial situation of Hong Kong consumers approximately one year after the World Health Organization declared COVID-19 a global pandemic. The most recent study in March 2021 found that 78% of respondents said their household income has been negatively impacted by the pandemic at some point. During the last wave of the survey the week of November 30, 2020, 69% of survey respondents said their household income was being negatively impacted by the pandemic.
Previously known as the TransUnion Financial Hardship study, the Consumer Pulse study polled 785 Hong Kong consumers from March 5-22, 2021. Having experienced several waves of COVID-19 infections in the past year, Hong Kong consumers are still bearing the brunt of prolonged financial pressure on their lives. 61% of Hong Kong consumers expect that their household income will continue being negatively impacted by the pandemic.
“Over the past year, TransUnion maintained this study of economic hardship to examine the financial impact of COVID-19 on Hong Kong consumers,” said Francis Lau, director of research and consulting, Asia Pacific, TransUnion. “The insights from this rich data set provide an invaluable global barometer of the pandemic’s financial impact.”
Consumers become more pragmatic in managing personal finances
The latest survey results show that the impact of the pandemic on consumer income and employment conditions continue. Compared to the last wave of the survey, the percentage of consumers in households with someone who lost their job increased by fourteen percentage points, from 13% to 27%. Sixteen percent of consumers in the most recent study were in households where someone was furloughed. However, fewer respondents said they were in households where someone was working a reduced number of hours – down from 57% last wave to 47% this March.
A significant 72% of currently negatively impacted respondents are concerned about their ability to pay current bills/loans in full, up from 58% in the last wave. Forty two percent of those impacted as of March 2021 stated they will not be able to pay their bills/loans in less than four weeks.
Hong Kong consumers cut household budgets to tackle the financial hardship period. Sixty-six percent of respondents whose household income is currently decreased have cut back on discretionary spending. This includes limiting money spent eating out and lowering the amount spent on entertainment. Twenty-nine percent of respondents have also cancelled or reduced their subscriptions or memberships, and 28% have cut back their spending on digital services. Looking forward, 52% of all respondents expect to decrease discretionary personal spending, and 49% of them say they will decrease large purchases such as appliances and cars in the next three months.
“Our latest survey shows that while financial hardship continues to worsen, Hong Kong consumers continue to face their burden with a pragmatic attitude.” said Francis Lau, director of research and consulting, Asia Pacific, TransUnion. “They are employing multiple approaches including spending less, saving more, and cancelling subscriptions or digital services to keep afloat during the pandemic.”
Consumers are saving up to combat unexpected financial setbacks
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.
Having experienced a year of disruption, 95% of respondents now feel it is important to have savings for unexpected events or financial setbacks, and 94% of respondents say it’s at least moderately important to monitor their credit. When asked about their strategy for paying bills and loans during extreme periods of hardship for those whose household income is currently decreased, drawing money from savings was seen as top choice (44%), while borrowing money from a friend or family member (41%) and taking out personal loans (27%) came in second and third place. Twenty-two percent of respondents are also deciding to use their available credit card balance, and 18% are planning to use their payment holiday to help pay their bills and loans, up from 18% and 7% in the last wave respectively.
Twenty-three percent of respondents received a financial accommodation such as deferral, forbearance, or payment holiday in the past year. Over three quarters (78%) of those with financial accommodations said they are at least fairly well prepared financially for when their accommodation period ends. This financial stability is reflected in the consistent household spending expected over the next three months. Among all respondents, 59% said they will spend the same amount on medical care/services, 58% the same amount on bills and loans such as housing, utilities, insurance and credit cards, and 56% the same amount on digital services such as wireless services, cable TV and the internet.
“Over the past few months, we’ve been seeing increased collaboration between consumers and financial institutions to come up with solutions to alleviate financial hardship together. It is a great sign of positive credit management to see consumers create recovery plans to deal with the future,” says Lau. “Despite challenging circumstances, Hong Kong consumers have maintained a high degree of resiliency and a low delinquency rate, which will help us withstand future stresses.”
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.
 Last wave of the Consumer Financial Hardship Survey was conducted in the week of November 30 2020 with 1,000 Hong Kong consumers 18 years of age or older.