4 in 5 consumers hold only credit cards: report

Only 11% belong to the "flexible funding wallet" segment.

Whilst Hong Kong’s consumer credit market is often seen as mature, most credit-active consumers rely almost exclusively on credit cards, signalling untapped potential for both consumers and lenders through greater credit wallet diversification, according to a new study by TransUnion.

According to the study, titled “Understanding Wallet Mix and Lender Segmentation”, 83% of Hong Kong consumers hold only credit cards in their wallets, classifying them in what TransUnion refers to as the "basic spend wallet" segment.

A smaller portion of the population falls into the "flexible funding wallet" category (11%), which includes consumers with credit cards plus one personal loan or revolving credit line.

The "extended credit wallet" group, or consumers who hold multiple types of credit products, makes up just 2% of the market.

Despite perceptions of market saturation, TransUnion reported that each segment has seen growth since 2018, with the basic spend wallet growing fastest at 8.8% from November 2018 to November 2024.

The study also examined consumer behavior among those with more diverse credit profiles. Flexible funding consumers were found to be the most likely to seek new credit products, particularly personal loans (4.4%), followed by credit cards (2.5%) and revolving credit lines (2.0%).

When seeking new personal loans, 58% of these consumers remained with their existing lenders, whilst loyalty was significantly lower for credit cards and revolving lines.

In terms of credit performance, the study found that delinquencies were generally lower for products issued by traditional banks compared to money lenders and digital banks.

For example, bank-issued personal loans had a 0.20% delinquency rate six months after origination, while loans from moneylenders saw a delinquency rate of 0.27%.

TransUnion concluded that lenders have an opportunity to foster responsible growth by encouraging wallet diversity.

Strategies such as personalized product offerings, cross-selling, early default detection, and customer retention programs could help lenders expand their portfolios whilst offering consumers more tailored credit solutions.