Credit card billings swell by 47% in first quarter

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Metro Manila (CNN Philippines, May 16) — Post-lockdown revenge spending among Filipinos continued to fuel the domestic economy as seen by the surge in credit card use in the first quarter of 2023, the Credit Card Association of the Philippines (CCAP) said on Monday.

Data from the CCAP showed a 47% gross billings surge that totaled to ₱410 billion during the first three months of the year, the highest since the COVID-19 pandemic started in 2020. In the same period in 2022, billings reached ₱279 billion.

The CCAP said based on its quarterly survey of its 12-member issuers, 11.8 million credit cards were issued nationwide as of end March. Around 64% or 7.5 million Filipinos own only one card.

The group also said it does not see personal consumption slowing amid high interest rates and rising 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," he added.

Most recent data from the Philippine Statistics Authority showed the inflation rate continued its downward trend, sliding to 6.6% in April from a 7.6% in March.

To manage the rising inflation, the Philippine central bank raised borrowing costs by 425 basis points (bps) in May 2022 which brought its policy rate to 6.25%, a record-high in almost 16 years.

Ilagan also said pent-up demand for consumer goods and services will persist and feed into the growth of different economic sectors such as e-commerce, retail and services, travel and tourism, automotive, and housing.

"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.

Household consumption, the main economic driver in the country, grew by 8.3% in 2022 compared to 4.2% in 2021. Credit card receivables accounted for the lion's share of consumer loans at 40% as of December 2022.

"While the 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," Ilagan said.