“REVENGE spending” has increased in the first three months of the year by 47 percent to P470 billion, data from the Credit Card Association of the Philippines (CCAP) revealed.
In a statement issued on May 15, the CCAP said its data showed gross billings jumped 47 percent to P410 billion during the first three months of the year compared with P279 billion in the same period in 2022.
The first quarter growth rate is also the highest since mobility restrictions were imposed in 2020.
And while interest rates and inflation could still rise, the CCAP said it doesn’t see a let up in personal consumption soon.
“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 Alexander G. Ilagan was quoted in the statement as saying.
“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,” Ilagan added.
Moreover, the CCAP chief added that as the economy continues to reopen and becomes more robust, pent-up demand for consumer goods and services will persist, feeding into the growth of the e-commerce, retail and services, travel and tourism, automotive and housing sectors, among others.
“The credit card industry is indirectly contributing to this economic resurgence,” Ilagan said.
“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 added.
Based on the CCAP’s quarterly survey of its 17 member issuers, there are now a total of 11.8 million credit cards issued in the Philippines as of end-March.
Majority (64 percent) or around 7.5 million Filipinos own only one card.
Data from CCAP shows that household consumption, the main economic driver in the country, grew by 8.3 percent in 2022 compared to 4.2 percent in 2021.
Credit card receivables accounted for the lion’s share of consumer loans at 40 percent as of December 2022.
“While Filipinos’ spending spree keeps the economic engine chugging along, we must bear in mind that a credit card is not ‘free money,’” Ilagan said.
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, he added.