TransUnion: Over half of Hong Kongers in debt to personal loans
Hong Kong, 19 May 2014 – In a time of low interest rates, over half of Hong Kongers currently have personal loans under their belt - a survey by TransUnion, Hong Kong’s credit reference agency, has found. More than 30% of 500 Hong Kong natives surveyed said they owe more than HK$10,000 in personal loans at the moment, while 40% of those surveyed have paid more than HK$5,000 on average in monthly credit card repayments over the past six months.
In March, TransUnion commissioned Zogby Analytics to conduct an online survey of 500 18-and-up Hong Kong natives, studying credit and personal loan debt (ex-mortgage) and credit health patterns in the city.
The survey shows that 52% of respondents are repaying personal loans at the time of survey, while 18% have to re-pay between HK$10,000-60,000 and 14% owe over HK$100,000.
Although many Hongkongers own several credit cards, the survey found that 36% of respondents actively use only two credit cards and 23% actively use three to four credit cards. Survey findings also showed that 23% have incurred credit card debt between HK$5,000-10,000 per month, while 17% have re-paid over HK$10,000 in outstanding credit card payments per month over the past six months.
The survey asked respondents how much of their monthly income is used to pay personal loans and credit card debt. 12% of respondents said this accounted for over 40% of their monthly income, while 15% said 20-40% of their monthly salaries pays off personal loans and credit card debt.
Commenting on the results of the survey, Angus Choi, Managing Director of TransUnion Hong Kong, said, “One-third (33%) of respondents said they don’t always keep track of what they owe on a regular basis, and fail to pay their personal loans and credit card debt on time. This indicates that many Hongkongers remain unaware of the importance of staying in good ‘credit health’. Any late payments of their credit card debt and personal loans will not only incur extra interest expenses but will impact their credit score. Nearly all banks and credit providers make reference to credit scores when assessing loan applications. A low credit score can significantly affect future credit card, personal loan or mortgage loan applications.”
Choi added: “Given that many Hong Kong consumers are actively using more than two credit cards every month, it’s easy for people to lose track of which outstanding payments they have settled, and by how much. This could prove detrimental because ongoing late credit card payments will also influence a consumer’s credit score and consequently, their chances of securing lower-interest credit.”
TransUnion has provided the following tips to help consumers improve their credit health:
- Create a monthly spending plan and stick to it: Determine your current spending habits, and set a monthly budget to determine just how much disposable income you have so you can manage it wisely.
- Pay your bills on time and use credit responsibly:This will help you reduce interest payment and avoid over-stretching yourselves. Responsible debt management plays a key role in your financial well-being.
- Check your credit reports frequently: The first step to robust credit health is to recognize which bad financial habits, such as late payments, you may have and how they are represented on your credit report. Regular check-ups may also help you guard against identity theft.
- Know your credit score: Understand what affects your credit score and take the necessary steps to reaching healthier credit. The higher your score, the better interest rate you are likely to receive. You can find the credit score in your credit report.