USING credit cards can help young Filipinos in their “adulting journey” but the Credit Card Association of the Philippines (CCAP) cautioned them to still be mindful of their credit behaviors.
Citing data from the Bangko Sentral ng Pilipinas (BSP), the CCAP said Filipinos own an average of 2.3 credit cards with 11.3 million cards-in-force as of the end-2022.
The organization further said fresh college graduates who are joining the workforce and embarking on their “adulting” journey help prop up the numbers for the credit card industry.
“No one is born with a good credit score so be conscious of your credit behavior,” CCAP Executive Director Alex G. Ilagan advised young people. “Track your billing cycles and due dates. Avoid accumulating interest charges and debt to maintain a good credit score.”
By doing these, Ilagan said spending could be monitored.
“This also helps you track your spending and spot any budget guzzlers you can do without,” he added.
While local card issuers are prohibited by law to issue a credit card to those who cannot show proof of income from employment or business, fresh college graduates or those ages 18 years old and below can still have access to this financial tool by being a supplementary cardholder.
Being a supplementary credit cardholder allows young Filipinos to take the initial step in benefitting from the financing available in having credit cards. CCAP said having credit cards can also help those who are about to enter the formal workforce.
“It is important for young people to be equipped with the right tools in managing their adulting life by knowing how credit cards can work for their cash flows,” Ilagan said.
“Our aim is to educate them as early as possible so they know what credit is and how they can manage their credit cards well when they get theirs. Any organization, not just schools, can reach us for these enlightening seminars,” he added.
The CCAP has been actively conducting credit awareness programs in various colleges and universities since 2017.
Loan application
MEANWHILE, the BSP’s Consumer Expectation Survey (CES) results showed that about 8.6 percent of households expressed their intention to apply for a loan in the next quarter.
BSP data also showed that more Filipinos or 9.6 percent of households intend to borrow financing in the next 12 months.
Those who intend to borrow money are mainly from Areas Outside of the National Capital Region (NCR) and are earning less than P10,000 a month.
The data showed that 9.3 percent of households from AONCR intend to secure loans next quarter while only 4.5 percent of respondent households from NCR intend to do the same in the April to June period this year.
The BSP said 10.1 percent of households in AONCR intend to obtain loans in the next 12 months, higher than the 6.6 percent recorded among NCR-based households.
In terms of income, 10.7 percent of those earning less than P10,000 a month intend to borrow funds in the second quarter followed by the 9.2 percent earning between P10,000 and P29,999 and 5.7 percent earning P30,000 and above.
The credit access of those intending to borrow funds in the second quarter averaged 89.6 percent, the lowest since the second quarter of 2022.
The BSP data also showed 11.7 percent of those belonging to the income group earning less than P10,000 intend to borrow in the next 12 months.
This was followed by 10 percent among those earning P10,000 and P29,999 a month and 7 percent earning P30,000 and over.
The credit access of those who intend to borrow in the next 12 months is higher at 93.3 percent, the highest in the past 12 quarters.
Currently, 22.8 percent of households obtained loans in the past 12 months. More than half or 52.1 percent of these loans were used to purchase basic goods.
Some 25.4 percent were used to start or expand a business, 15.2 percent were education-related loans, 13.3 percent were for health-related concerns and 11.2 percent were obtained to pay off other debts.