Philippine credit card delinquency rate falls

THE COUNTRY’S credit card delinquency rate dropped to 3.26% in the first quarter, even as credit card billings surged, the Credit Card Association of the Philippines (CCAP) said on Monday.

The rate, which refers to the percentage of borrowers who fail to pay the minimum amount due, has been falling since peaking at 8.37% in 2020 at the height of a coronavirus pandemic, CCAP data showed. It was 3.32% in 2022 and 4.03% in 2021.

Card delinquency also refers to the payment of less than the minimum amount of credit card debt for at least three billing cycles.

Card delinquency has been falling even as credit card billings climbed by 47% to P410 billion in the first quarter from a year earlier, CCAP said in a statement.

This was the highest growth since the pandemic, as Filipinos spent more on shopping, traveling and buying goods after two years of lockdowns.

Consumers should be reminded that using a credit card does not give them free money, CCAP Executive Director Alex Ilagan said in the statement. “While Filipinos’ spending spree keeps the economic engine chugging along, we must bear in mind that a credit card is not free money.”

CCAP, which is made up of 17 credit card issuers, has been conducting credit awareness programs for colleges, universities and companies since 2017 as part of efforts to teach more Filipinos to become responsible borrowers.

“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,” Mr. Ilagan said. “Any organization, not just schools, can reach us for these enlightening seminars.”

CCAP has been reminding consumers to use credit cards wisely. This includes not using a credit card beyond one’s capability, which could lead one to become mired in debt.

Credit card users should also monitor their total monthly spending to avoid exceeding their credit limit.

“A maxed-out credit card can also cause financial strain, especially for people who can only manage to make minimum payments each month,” CCAP said. “The minimum monthly payments will likely grow past the cardholder’s paying capability, causing them to miss their dues.”

Consumers should also settle their bills on time to avoid late fees and other penalties. — Keisha B. Ta-asan