Overdrafts

An overdraft is a ready credit facility that offers you extra cash whenever you need it, and for whatever purpose. Overdrafts provide you with the flexibility of funds when you need it most. There are several types of overdraft facility, see all overdrafts from HSBC.

What is the difference between a loan and an overdraft?

A loan is when you borrow a fixed amount of money for a fixed period of time. This is usually cheaper than an overdraft. If you have a regular, predictable income then a loan is often the recommended option.

If you don't know exactly how much you need to borrow or when you'll need it, an overdraft may be a better option. This allows you to borrow up to a certain amount without notice, and to make flexible repayments rather than being tied into a definite repayment schedule.

Overdrafts usually have a higher rate of interest than loans, but the cost can sometimes be reduced if they are secured against other assets such as investment or cash deposits.

What documents do I need to apply for an overdraft?

Generally the bank needs the following for processing a clean credit application:

• Hong Kong Identity Card (HKID) (Not required for existing HSBC customers); OR working visa / employment contract / employment letter with details on employment period (for applicants who are not holders of HK Permanent ID Card).
  
• Either one of the following income proof documents:

1. Bank account statements/passbook explicitly showing the credit of month’s payroll record (three months’ for irregular income earners¹); OR

2. Bank account statements/passbook showing monthly deposits for the past one month (three months for irregular income earners¹) plus recent salary payroll advice dated within three months of application or valid employment letter confirming job title / income details dated within three months of application or valid Tax Demand Note issued by Inland Revenue Department for the last tax year.

HSBC payroll customers with at least one month payroll record (three months for irregular income earners¹) immediately prior to the overdraft application are not required to submit income proof. The Bank, however, reserves the right to request for the same at any time.

¹ Irregular income earners include customers working on a part-time, commission or profit-sharing basis.

For secured credit application, there is no required document given the credit limit is secured against your assets

For clean credit application, if you are an existing HSBC customer with a payroll account at HSBC and hold a HK Permanent ID Card, no supporting document is required. The Bank, however, reserves the right to request these at any time. 

Will I be charged interest for credit I haven't used?

No.

What are the factors affecting the Credit-to-asset Ratio change?

We closely monitor the credit-to-asset ratio for your secured assets which is subject to irregular changes due to market volatility. The credit-to-asset ratio is affected by various factors, including but not limited to the market capitalisation and profitability of the secured assets’ underlying company, turnover and price volatility of the secured asset etc.

From 31 October 2022 onwards, no new Secured Credit application will be accepted. I am an existing Secured Credit customer, can I continue to use the service?

You can continue to use the service as usual before and after 31 October 2022, subject to all applicable terms and conditions. If you cancel the existing service, you will no longer be able to apply for any new secured credit service following the cancellation. You can find more information about the interest rate, eligible assets and credit-to-asset ratio for your Secured Credit here.