While credit card penetration in Hong Kong is high, getting a credit card or opening a bank account is not always easy for the city’s newcomers. Whether high-earning expats, domestic helpers or foreign entrepreneurs, all face troubles in getting access to financial services.
Most banks publicly disclose which documents are needed to apply for a credit card, but it’s less clear why some applications get rejected while providing all necessary documents, such as employment contract, salary proof and address proof. Not being able to get a credit card is, of course, a big issue, as in Hong Kong you will need a credit card to buy anything online; Hong Kong ATM/cash cards, unfortunately, do not work online as they work on the EPS system.
This article provides multiple examples of cases where couples providing the same documents, applying with the same bank get different outcomes. It even seems that sometimes the person with the higher income gets rejected while the person with the lower income gets accepted.
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It is hard to find out what the ultimate reason is why your application gets rejected – banks don’t disclose the reason and don’t disclose their exact policy. Based on the many articles, anecdotal evidence and forum topics on this issue there seem to be several factors that affect the results and could lead to rejection. Some of them include:
- Salary – either too low or too high (banks sometimes prefer people who cannot pay back the credit quickly on time)
- Length of employment contract / proof of staying in Hong Kong for a certain amount of time
- Unstable income. Even if you have high, documented earnings from your freelance work or own business, many banks will reject your credit card application if your income is not stable / fixed
- Credit history. You will have no credit history when just landing in Hong Kong, which may affect your ability to get a credit card
- Arrival date in Hong Kong. Sometimes banks only give out credit cards if certain number of months of salary have previously been deposited in your current account
- Start-up / new company. It’s even more difficult to get a corporate credit card. Start-ups may get rejected almost automatically, despite having a certain amount of funds in their accounts or generating revenue.
Another issue is that once a credit card has been issued, the limit might be too low for what you require and can easily pay off given your salary. With no real-time updates it’s difficult to know how much you can still spend on your card in a given month and it’s not always easy to quickly pay off mid-month to free up credit.
There are also people who prefer not to risk getting into debt by using a credit card as they might have trouble managing their finances well. Using a credit card and not paying it off on time and in full often carries hefty interest charges which quickly compound every month leading to financial troubles.
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Difficulties with opening a personal bank account usually arise from not being able to provide the required documents in the way the bank would like to see them. The minimum requirements are a passport or HKID and proof of address, but banks often ask for additional documents such as employment contracts. While legally the proof of address may be from your home country or Hong Kong, some banks only accept Hong Kong proof of address and many newly arrived expats do not have one.
Banks may then send you a letter to your home which you will need to sign and return to the branch (in person) so all in all this can take some time, including all the queueing, and does not make for a good experience. Moreover, if you do not (yet) live here, and you do not have an HKID, address or employment contract, you are legally allowed to open a bank account in Hong Kong, but not all banks will open one for you.
Another issue is that some banks make it more difficult to open accounts for ethnic minorities and certain nationalities, especially if the customer has a lower income. This SCMP article discusses some examples of for instance Pakistanis having difficulties opening bank accounts. While there are some nationalities that banks and related services (including us) are legally restricted from opening accounts for, there are no restrictions for many other nationalities, but banks are reluctant to help customers from these countries.
It’s a sad situation, as being un(der)banked or having no credit card limits access to important services. With Neat, we aim to make a change and make financial services easily accessible to anyone. And while the situation is bad for individuals, it’s possibly even worse for young companies trying to open a corporate bank account. More about that in our next blog.
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