1 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

2 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.

3 Respondents' Profile

4 Gender Successful cases ： 501

5 Age Successful cases ： 498

6 Educational Level Successful cases ： 498

7 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

8 Monthly Personal Income Successful cases ： 476

9 Survey Findings

10 1. Credit Card Usage Behavior

11 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? Successful cases ： 501 Avg ： 3.5 cards Error ： 0.09 cards Base ： 499

12 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 ? Successful cases ： 500 Avg ： $7,164 Error ： $252 Base ： 493

13 2. Challenges in Clearing All Card Debts

14 Almost half of respondents opted for partial repayment of card debts Q ： In general, will you repay all credit card debts? Successful cases ： 501 Don’t know/ Hard to say, 3%

15 For those making partial payment, 30% opted for settling minimum payment Q ： If not, what percentage of the debts will you settle in general? Successful cases ： 245 Avg ： 29.8% Error ： 1.73% Base ： 245

16 The triggers for revolving credit: gripping cash; cash flow only sufficient to cover minimum payment Q ： Why didn’t you repay all card debts? Successful cases ： 244 (Multiple answers)

17 37% considered making full repayment of card debts difficult Q ： How difficult do you think repaying all card debts is? 37%37% Successful cases ： 501

18 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? Successful cases ： 184 （ Multiple answers ）

19 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? Successful cases ： 242 （ Multiple answers ） Among those who are unable to make full repayment:

20 3. The impact of high interest card debts on respondents’ quality of life

21 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? Successful cases ： 501 （ Multiple answers ）

22 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 Successful cases ： 500 （ Multiple answers ） Q ： Do you think the following would happen if you cannot repay all card debts?

23 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 Successful cases ： 501 （ Multiple answers ） Q ： Do you think the following would happen if you cannot repay all card debts?

24 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 Successful cases ： 499 （ Multiple answers ） Q ： Do you think the following would happen if you cannot repay all card debts?

25 4. Knowledge on Balance Transfer Plans

26 Almost 90% respondents have heard of balance transfer plans Q ： Have you ever heard of balance transfer plans? Successful cases ： 501

27 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? Successful cases ： 444 （ Multiple answers ）

28 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? Successful cases ： 444 （ Multiple answers ）

29 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? Successful cases ： 443

30 Conclusion

31 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.

32 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

33 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