Credit card billings rise to P410 billion in the first quarter
CREDIT CARD USE rose in the first quarter amid continued robust spending among Filipinos, the Credit Card Association of the Philippines (CCAP) said on Monday.
Data from the CCAP showed gross credit card billings of the industry jumped by 47% to P410 billion in the first quarter from P279 billion in the same period last year. This marked the fastest growth since the coronavirus pandemic started in 2020.
There were 11.8 million credit cards issued in the country as of end-March, data from the CCAP’s quarterly survey of its 17 member issuers showed. Around 64% or 7.5 million Filipinos own only one card.
According to the CCAP, personal consumption may still not fade amid high interest rates and elevated inflation.
“If at all, rising inflation may even push more cardholders to use their credit card to cope with the higher prices because a credit card is one way to extend your purchasing power,” CCAP Executive Director Alex Ilagan said in a statement.
“A credit card is basically a form of installment credit which the Filipino consumer has learned to utilize. As long as cardholders pay on time, it will have no negative impact on either the cardholder or the bank issuer,” Mr. Ilagan said.
Inflation slowed for a third straight month in April to 6.6% from 7.6% in March. For the first four months of the year, inflation averaged 7.9%.
To tame elevated inflation, the Philippine central bank has raised borrowing costs by 425 basis points (bps) since May 2022, bringing its policy rate to 6.25%, the highest in nearly 16 years.
Pent-up demand for goods and services will persist and feed into the growth of the economy, Mr. Ilagan added.
“If the economy remains strong, more people will be employed and will qualify for a credit card, thus sustaining the growth in credit card ownership and usage. Credit card delinquency rate will also remain low and may even continue its downtrend in the last two years because cardholders will have the means to pay their bills,” he said.
Household consumption went up by 6.3% in the first quarter. This was slower than the 7% growth in the previous quarter, and 10% a year earlier.
Robust household consumption caused the Philippine economy to grow by 6.4% in the first quarter of the year.
“While Filipinos’ spending spree keeps the economic engine chugging along, we must bear in mind that a credit card is not ‘free money,’ All transactions charged to a credit card will have to be paid so be a responsible card user and don’t use your credit card beyond your capability to repay the amount at a later date,” Mr. Ilagan said. — K.B. Ta-asan
