Transcript Key proposition - University of Hong Kong

How High Interest Card Debts Affects
Debtors’ Quality of Life Survey Report
Dr. Robert Ting-Yiu Chung
Director of The Public Opinion Programme,
University of Hong Kong
1
Survey Overview
Survey
Objective
To investigate the impact of debts from high interest rate
credit cards on debtors’ quality of life to help plan the public
education on proper financial management
Survey Period May 26, 2008 to June 2, 2008
Methodology
Telephone survey with interviewers
Survey Target Hong Kong citizens aged 18 or above who were credit card
users and had revolved their credit last year
Survey
Institute
The Public Opinion Programme, University of Hong Kong
Sampling
Method
The 6,000 contacts were randomly drawn from the database
of the commissioning organization and the numbers were
mixed in random order to produce the final sampling frame
by the research institute.
Sample Size
501 successful cases
Response
Rate
61.9 % (Calculation based on the number of qualified targets)
Standard
Sampling
Error
Less than 2.2 %, the sampling error for all percentages was
less than plus/minus 4.5 percentage points at 95%
confidence level.
2
Respondents' Profile
3
Gender
Female
44%
Male
56%
Successful cases：501
4
Age
40%
32%
32%
30%
19%
20%
15%
10%
1%
2%
0%
18 - 24
25 - 30
31 - 35
36 - 40
41 - 45
46 or
above
Successful cases： 498
5
Educational Level
Primary or
below
3%
Postsecondary
or above
32%
Secondary
65%
Successful cases： 498
6
Occupation
Working class–Full-time Work
97%
Working class–Part-time Work
1%
Non-working class –
unemployed
<1%
Non-working class – Student
<1%
Non-working class – Retired
<1%
Non-working class – Housewife
2%
Total
100.0%
Successful cases： 497
7
Monthly Personal Income
60%
54%
50%
40%
30%
19%
16%
20%
10%
5%
1%
2%
2%
0%
$5,000 or
below
$5,001 $10,000
$10,001 $20,000
$20,001 $30,000
$30,001 $40,000
$40,001 $50,000
$50,001 or
abov e
Successful cases： 476
8
Survey Findings
9
1. Credit Card Usage Behavior
10
Respondents owned 3.5 credit cards on
average at a time
2% owned 10 credit cards or above
Q：How many credit cards have you owned at your prime?
Avg ：3.5 cards
Error：0.09 cards
Base ：499
70%
60%
59%
50%
40%
34%
30%
20%
5%
10%
2%
0%
1 - 3 cards
4 - 6 cards
7 - 9 cards
10 cards or above
Successful cases： 501
11
Respondents on average spent HK$7,164 on credit card at
that time
10% spent over HK$20,000 per month
Q：What was your average monthly credit card spending (including both payment
and advanced cash withdrawal) then ?
Avg ：$7,164
Error：$252
Base ：493
40%
35%
34%
29%
30%
25%
20%
13%
15%
10%
8%
10%
4%
5%
1%
0%
$3,000 or
below
$3,001 $6,000
$6,001 $10,000
$10,001 $15,000
$15,001 $20,000
$20,001 or
abov e
Don't
know/Hard
to say
Successful cases：500
12
2. Challenges in Clearing All Card
Debts
13
Almost half of respondents opted for
partial repayment of card debts
Don't
Know/Hard to
Q：In general, will you
repay all credit card debts?
say
3%
Don’t
know/ Hard to say, 3%
Make
partial
payment
49%
48%
Make full
payment
Successful cases：501
14
For those making partial payment,
30% opted for settling minimum payment
Q：If not, what percentage of the debts will you settle in general?
Avg ：29.8%
Error：1.73%
Base ：245
29%
Min payment(i.e. 5%)
24%
Repay some (6-20%)
14%
Repay some (21-40%)
20%
Repay some (41-60%)
4%
Repay some (61-80%)
2%
Repay some (81-90%)
7%
Repay most of them (i.e. 91-99%)
0%
5%
10%
15%
20%
25%
30%
35%
Successful cases：245
15
The triggers for revolving credit:
gripping cash; cash flow only sufficient to
cover minimum payment
Q：Why didn’t you repay all card debts?
54%
Want to keep more cash in hand
Cash flow only sufficient to cover minimum
payment or partial payment
51%
19%
Card debt are not too heavy
Want to spend money on investment, travel,
study...etc
18%
Feel more advantageous paying at a later
time
5%
2%
Others
0%
10%
20%
30%
40%
50%
60%
Successful cases：244 (Multiple answers)
16
37% considered making full
repayment of card debts difficult
Q：How difficult do you think repaying all card debts is?
37%
30%
27%
25%
21%
21%
21%
20%
15%
10%
10%
5%
1%
0%
Very difficult Quite difficult
Av erage
Not really
difficult
No difficulties
Don't
know/Hard
to say
Successful cases：501
17
Difficulties in making full payment:
63% blamed the high interest rate of credit card
59% overspent on credit cards without noticing it
Q：Why it’s so difficult to repay all card debts?
63%
Interest rate of credit cards is too high
59%
Ov er-spending on credit cards without noticing it
Do not know the exact amount of debt as all cards
hav e debts
39%
Pay off card debt with other credit cards, yet end up
with hefty debts
22%
3%
Others
Don't know/ Hard to say
1%
0%
10%
20%
30%
40%
50%
60%
70%
Successful cases：184（Multiple answers ）
18
Among those who are unable to make full repayment:
47% would borrow from banks or financial institutes;
48% would pay all he/she had; 41% would wait for double
salary pay or year-end bonus
Q：Whom will you turn to for help if you cannot repay all card debts?
48%
Repay all I have
47%
Borrowfrom banks or financial inst it ut es
41%
Wait for double salary pay or year-end bonus
11%
Work for more part t ime jobs
9%
Borrow from family members and friends
7%
Pay off credit card debt wit h ot her credit cards
Ot hers
Don't know/Hard t o say
0%
1%
1%
5%
10% 15% 20%
25% 30% 35% 40%
45% 50%
Successful cases：242 （Multiple answers ）
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3. The impact of high interest card
debts on respondents’ quality of life
20
Over 80% thought debts from high interest rate credit cards affected their
financial status
Near 50% felt they would be controlled by card debts, more
careful in spending, would not have enough money to spend
and would have no savings
Q：Which of the following do you think would happen if you cannot repay all
card debts?
48%
Feel being controlled by card debt
Less freedom due to the need of more
cautious spending
48%
Not enough money to spend
48%
No future as no savings can be made
48%
4%
Others
13%
No impact at all
0%
10%
20%
30%
40%
50%
60%
Successful cases：501 （Multiple answers ）
21
75% considered debts from high interest rate credit card affected their
psychological aspect
30-40% thought they would feel stressful, afraid
that their family members and friends would
know about their situation
Q：Do you think the following would happen if you cannot repay all card debts?
39%
Feeling st ressful
33%
Afraid family members may not ice about t heir sit uat ion
29%
Self-hat red from over-spending
23%
Afraid of receiving mont hly card st at ement
21%
Being emot ional
17%
Sleep poorly
None of t he above
No impact at all
6%
25%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Successful cases：500 （Multiple answers ）
22
Over 90% respondents thought high interest rate credit card
debts affect their daily spending behavior mainly because they
would have
Reduce shopping and spending on meeting with friends
Q：Do you think the following would happen if you cannot repay all card debts?
76%
Reduce shopping
Reduce spending on
meeting friends
51%
40%
Reduce spending on meals
Reduce allowance for
family
18%
2%
None of the abov e
7%
No impact at all
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Successful cases：501 （Multiple answers ）
23
50% respondents thought high interest card debts affect their work:
About 20% afraid of receiving payment reminder calls and
had problem in concentrating on their work
Q：Do you think the following would happen if you cannot repay all card debts?
22%
Afraid of receiv ing payment reminder calls
19%
Difficult to concentrate on their work
Afraid boss or colleagues may notice about their
problem
17%
Affect work efficiency
15%
48%
No impact at all
11%
None of the abov e
2%
N/A (non-working people)
0%
10%
20%
30%
40%
50%
60%
Successful cases：499 （Multiple answers ）
24
4. Knowledge on Balance Transfer
Plans
25
Almost 90% respondents have heard
of balance transfer plans
Q：Have you ever heard of balance transfer plans?
No
11%
Yes
89%
Successful cases：501
26
Benefits of balance transfer plans to respondents who have heard of it:
Fixed monthly repayment amount, a good grasp of the situation facilitated
by consolidated accounts and controllable repayment schedule
Q：What are the benefits of balance transfer plans?
76%
Fixed monthly payment amount
Consolidation of all accounts so that debtors can hav e
73%
a good grasp of their situation
71%
Prov ide a clear picture of repayment schedule
Lower interest rate for earlier repayment of capital &
67%
interest
62%
Shorter repayment period
59%
Lower monthly repayment amount
Others
1%
2%
No benefit at all
2%
Don't know/Hard to say
0%
10% 20% 30% 40% 50% 60% 70% 80%
Successful cases：444 （Multiple answers ）
27
Wish list for ideal balance transfer plans to those who have heard
about that:
Maintain quality of life; flexibility to make adjustment after the
plan is proposed; personalized services from specialists for
customized financial management
Q：What other advantages do you think balance transfer plans have apart
from the mentioned items?
63%
Quality of life will be kept intact
Hav e the flexibility of making
57%
adjustment after the plan is proposed
Specialists are av ailable to prov ide
51%
analysis & personalized serv ices
Others
2%
5%
None of the abov e
3%
Don't know/Hard to say
0%
10%
20%
30%
40%
50%
60%
70%
Successful cases：444 （Multiple answers ）
28
93% of those who have heard of balance transfer
plans
agreed balance transfer plans help shorten
repayment period
Q：Do you think balance transfer plans are effective solutions for
clearing card debts earlier?
Don't know /
Hard to say
1%
No
5%
Yes
93%
Successful cases：443
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Conclusion
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High interest card rates make full
payment difficult
Survey reveals that nearly half of the
respondents chose to make partial repayment
and among them, over 50% explained:
Some wanted to have more cash in hand and some
said they only have enough cash flow for minimum
payment or partial repayment
37% considered making full payment difficult:
Reasons： Interest rate of credit cards was too high;
some have overspent by their credit cards without
noticing it.
Respondents who would not settle all the
payment would usually repay all they had at
that time, borrow from banks or financial
institutes or wait for double pay or year-end
bonus.
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Impact of high interest card debts
on debtors’ quality of life
Impacts on financial status (87%) :
Feel card debts take control over life
More careful in spending
Not enough money to spend
No savings
Impacts on daily consumption behavior (93%) :
Reduce shopping and spending on meeting with friends
Impacts on emotional aspect (75%) :
Feeling stressful
Afraid their families would find out their problem
Hating themselves for overspending
Impacts on work (50%) :
Afraid of receiving payment reminder calls during working
hours
Had problems in concentrating on their work
32
Balance transfer plans help shorten
repayment period
A majority of respondents had heard of balance transfer
plans and those who have heard of it thought its benefits
included: 1) fixed monthly payment terms, 2) clear list of
financial standing and 3) have a good grasp of repayment
schedule. They considered balance transfer plans could
help settle card debts earlier.
For those who have heard of balance transfer plans, their
wish list of balance transfer plans included:
Quality of life being kept after adopting balance transfer plan
Flexibility in changing payment plans after adoption
Consultancy services arranged for customized financial
management
33