The balances of Generation Z customers skyrocketed 89%.
The credit card balance of Hong Kong residents rose 5% to $17.33b (HK$136b) in Q4 from $16.50b (HK$129.5b) the previous year which marks the fifth consecutive quarter where headline figures eclipsed inflation rates, according to a study from consumer credit reporting agency TransUnion.
Credit card balances stayed ahead of year-end inflation which hit 2.6% and in contrast to the low balances seen in 2016 and early 2017. Origination volumes also rose 9.2% in Q4 with new mortgage originations hitting a five-year high at 6.3% in Q3.
The generational gap was also evident as card balances amongst Generation Z (born 1995 onwards) soared 89% to over $191.14m (HK$1.5b) by the end of 2018 as this particular age group mature in the labour force which enhances the earning potential and credit needs. The trend can also be observed in the balances of millennials (born 1980-1994) which rose 17.7% even as the total credit card balances of baby boomers (born 1946-1964) fell 3.1%.
The most popular credit card in Hong Kong wallets are generic, bank-issued cards without a specific rewards feature although cards with a prominent air miles programme are aspiring to be a customer favourite and capture the highest share of total spend.
“Generic bank cards remain the cornerstone of the market, but with younger consumers seeming to prefer cards with a clear rewards program, the dynamics of the market continue to change,” Francis Lau, director of research and consulting for TransUnion Hong Kong said in a statement.
Do you know more about this story? Contact us anonymously through this link.