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Credit Card Society
Business & Finance  |   Link

Hong Kong is very much a cash society. Even with the many credit cards available, many are still lining up at ATMs to get cash. Everywhere I go here in CWB I notice people pay cash.

Today in NY Times, there was an interesting article on the need for credit companies to increase minimum paments and interest rates of consumer credit. The report mentions that consumer debt is pretty high in the US and from a credit risk prevention standpoint, many of the companies are protecting their business because of the high consumer bankruptcies of the 90s.

More on article: Soaring Interest Compounds Credit Card Pain for Millions. (NY Times, Free Reg Required)

I guess consumer credit is not such a big deal in the US when the government is really into deficit spending as well. It's all good for the US economy in some way. However this type of value of spending what you don't have is still not a common thing elsewhere. It's probably a type of American imperialism...let's force our value of consumer debt so that credit businesses can make more money...

I remember even Martin Yan mentioned how as a Chinese-American he prefers cash rather than credit in his financial well-being.

Credit cards or going into debt is not part of the culture here. Everyone works hard and lives pretty much within in their means. One tactic for the credit card company to encourage consumer credit is to offer discounts at restaurants or retailers. You can get anywhere between 15-20% off your meal in many places.

Ten years ago I worked at Robinson-May credit card office, setting up new credit applications, increasing credit limits, and in most cases declining credit purcahses or credit limit increases. I learned how to read credit bureaus and understand credit risk in relation to credit history. It was quite a frustrating experience since we would look at credit history of a client but also use a recent credit bureau report to back up our decision. In lots of cases folks still wanted more credit even after filing bankruptcy, loosing a car or home, or defaulting on other cards. These days if you have no credit history, it's quite difficult to get a good rate for a car or home loan. It's like our society perpetuates the need to have credit to show your worth...

Oh well, recently I've started to appreciate this cash society. If anything I use my credit card as a backup payment option. Even with the rewards systems that many of these cards have, I like not having to see a statement chronically all my purcahses and reminding me to settle my bill. I also like the Octopus card as a great substitute for cards. It's basically a cash card that you can use to pay for parking spaces, public transportation and small purchases at the grocery store and 7-11. Hopfully in the future it can be used for taxis as well.

I'll probably write more about this topic from a cultural standpoint. There's still so much to learn here.

Posted on November 21, 2004 08:03 PM