How HK consumers can earn credit card rewards the smart way

Hong Kong’s consumers prefer to pay with their credit cards instead of cash because of several reasons. Credit cards provide a convenient way to pay for goods and services not just at brick-and-mortar retailers but also at online shops.

Credit card rewards, like air miles and cashbacks, are also top reasons why more consumers choose to use credit cards in daily transactions.

HK consumers prefer plastic over cash
According to a 2014 survey by Nielsen which gathered the opinions of 500 respondents online, there’s a growing preference among Hong Kong consumers for the use of credit cards over cash in their daily transactions.

Exactly 50% of respondents said they prefer to pay with a credit card while 37% have a preference for paying with cash. Taken together with debit cards (6%) and prepaid cards (4%), that means that three out of five people in Hong Kong prefer to pay with plastic rather than cash.

In line with consumer preference to pay with plastic, credit card issuance keeps increasing in HK. Statistics from the Hong Kong Monetary Authority show there are 18.1 million credit cards in circulation by the end of the first quarter of 2014, representing a 3.3% increase from 17.5 million credit cards in 2013 Q1.

Value of credit card transactions has also grown by 8.8% to HKD 137.3 billion in the first quarter of this year, from HKD 126.2 billion in the same period last year.

Different cards, different ways to earn rewards
Hong Kong’s consumers are drawn to credit cards for more than just convenience—the chance to earn mileage points and access merchant promos also seems to be a major draw.

With so many rewards on offer, how can consumers take the most advantage out of their credit card?

First off, not all credit cards earn the same rewards. For air miles alone, some cards allow you to earn more for every dollar that you spend compared to others.

A quick look at popular Hong Kong credit cards would show that some cards let you earn 1 air mile for every HKD 5 that you spend (like the Standard Chartered World Miles card) while other cards let you earn 1 air mile for every HKD 15 that you spend locally.

It’s the same with cashback rewards. Some cards have this feature while some don’t.

For reward points, which you can also exchange for air miles, cash, coupons, some cards let you earn more points when you use the card at certain partner retail stores, shops, or restaurants.

How to get the most out of your credit card rewards
The trick to maximising credit card rewards is to choose a credit card that lets you earn the most rewards from the stores or categories that are most relevant to your lifestyle. This is also the obvious reason why HK banks and card providers have different credit cards on offer.

You can apply for the best card for dining, another card with extra reward points for online shopping, and one card that waive foreign currency transaction fee for travel uses.

Before you sign up for a credit card, you need to study your expenses and find out which category you spend most on. Do you spend more on groceries every month? Or perhaps you dine out with friends and family often? Do you own a car and pay for petrol with a credit card?

Knowing where you spend the most on every month can help you pick the right card for you so that you can earn rewards faster.

When you miss payments on your card, you also pay an interest on the balance and this can wipe out the value of the rewards that you’ve earned. Thus, it’s also a must that you know how to stick to good financial habits to truly be able to reap the benefits of your credit card.