Marketman’s Credit Card Series 2011, Part I – An Industry Overview

The vast majority of the readers of have at least one credit card in their wallets. The objectives of the following series of posts on credit cards in the Philippines are simple. To help readers, acquaintances and the public in general understand the local credit card industry a little better. To highlight the unique risks associated with Philippine-issued credit cards. To remind the public of particular safeguards they should consider to reduce the risk of holding their credit cards. To explain some of the salient features of credit cards that people may wish to learn more about. To encourage our legislators to review the laws governing local credit cards to ensure a truly reasonable playing field that protects consumer’s rights, as well as those of banks and credit card companies. To encourage the public to educate themselves and seek fair laws that govern the credit card industry in the country. And to narrate several recent, specific credit card and banking service shortfalls that I have experienced and which are a useful tool to illustrate many of the objectives stated above.

The Philippine Credit Card Industry, a very quick (by my standards) overview.

What is glaringly obvious is the difficulty of obtaining readily available industry statistics for the Philippine credit card market. Industry groups such as credit card associations, local press, studies, central bank reports, etc. seem to have published (particularly on-line) far less than I used to typically see in other global markets when I used to work as a management consultant, several times engaged to study and fix credit card related issues. But here is a basic overview I managed to piece together, and my sources are listed at the bottom of the post. Some of the figures are extrapolated or estimated, but I think the overall general picture is reasonably accurate given the sources used. Corrections from those with better and more reliable information are most welcome.

How many credit cards in the Philippines?

As of December 2010, there were roughly 6.7 million credit cards issued in the Philippines, and several sources suggest those cards are held by roughly 3.6-4.0 million individuals (many folks have more than one card each). If I had to take an educated guess, I would say that roughly 2.5-3.0 million people have one credit card each, while roughly 1.0+ million people have multiple cards.

Who are the biggest players or issuers of credit cards?

This is actually rather difficult to determine, the most concrete data I could find dates back to 2004, so this is my best guess extrapolating out and given news reports.

Banco de Oro (BDO)
Bank of the Philippine Islands (BPI)
(Standard Chartered or AIG as the other possible top five players.)

Citibank probably has well over 1.3 million cards issued, while the top 5 in total probably account for 2/3 or more of all credit cards issued in the country. For Citibank and HSBC, the vast majority of their credit card customers probably DO NOT have deposit accounts with those banks.

Estimated Industry Growth – Cards Issued

2004: 4.5 Million cards issued
2007: 6.0-6.2 Million cards (roughly 11% annual growth 2004-2007)
2008: 6.5 Million cards
2010: 6.7 Million cards (roughly 3% annual growth 2007-2010)

So industry growth has slowed dramatically to 3% per annum from 2007-2010, from 11% in the previous 7 years, DESPITE robust economic growth during the last three years.

Roughly 4 million people have credit cards, and this represents a huge constituency of citizens, many of whom are gainfully employed, salaried workers and business owners, who are mostly all within the top 10% of the income brackets of the country (see my previous post on Philippine poverty and income levels, here), and who earn incomes and salaries and pay the vast majority of taxes collected by the government. They and their immediate families constitute a serious voting block in this country and should be able to push for positive reforms in credit card laws if necessary. Personally, it is my opinion that the market is close to saturation, not only because of the apparent slowdown in growth of cards, but because of the demographics and average incomes I wrote about in my previous post(s).

Estimated Industry Growth – Credit Card Receivables

2000: PHP40 Billion (estimate)
2001: PHP45 Billion (estimate)
2002: PHP50 Billion (estimate)
2003: PHP53 Billion (estimate)
2004: PHP65 Billion (estimate)
2005: PHP80 Billion (estimate)
2006: PHP99 Billion (estimate)
2007: PHP116 Billion (roughly 16.2% annual growth rate from 2000-2007)
2008: No data found
2009: PHP 128 Billion
2010: PHP 135 Billion (June 2010, roughly 6% annual growth rate 2007-2010)

Loans outstanding or credit card receivables of banks grew at a blistering pace of 16.2% from 2000-2007, but slowed dramatically to roughly 6% per annum 2008 to June 2010.

Average Outstandings Per Card (Estimated)

2004: PHP14,444
2007: PHP19,016
2010: PHP20,149

However, it seems a majority of cards DO NOT CARRY REVOLVING BALANCES. This is consistent with a recent survey I did. So if you assume that only 45% of all cards do revolving balances (based on a quoted figure from the Credit Card Association of the Philippines), then you could adjust the above figures to reflect that 55% of all cards have zero or close to zero balances on average, while the remaining 45% have these extrapolated estimated balances per card:

2004: PHP32,098
2007: PHP42,257
2010: PHP44,776

To me, this is a stunning piece of data. Roughly 3 million cards carry an average of PHP44,776 in revolving balances. And if you assume that some folks have two or more cards, then the average revolving balances for some 2 million folks in the country is roughly PHP60,000 or more per person, and I won’t even hazard a guess per couple/family! I will show later how these folks are paying some PHP25-35,000+ per annum in effective interest, penalties and fees! If that isn’t reason enough for citizens and lawmakers to sit up and at least educate themselves, I don’t know what is!

Past Due Credit Card Receivables (as a percentage of total receivables)

2003: 18.0%
2004: 22.5%
2005: 20.5%
2006: 16.4%
2007: 14.2%
2010: 15.0% (June 2010)

Figures quoted from the press suggest that there are more than PHP18 Billion in past-due credit card receivables, or roughly 15% of total outstandings as of June 2010. Of these, probably more than half are well over 180 days in arrears, or the vast majority eventually going to be written-off the banks books. At least these figures are lower than those racked up in 2004, when nearly 1 out of every 4 pesos of loans were past-due.

All of these loans are probably charged not only the 3-3.5% monthly finance charge, but also another 6-7% late penalty or other similar fees. At roughly 10% per month or more than 210% compound annual interest, the chances of a debtor pulling themselves out of that debt trap are slim indeed. Let me simplify this for you. Let’s say you owe PHP100,000 on your credit card and due to a death in the family, emergency medical operation after being sideswipped by a bus or you were burglarized at home, hog-tied and all your worldly belongings stolen. You would miss your minimum payment for your credit card that month. And the credit card company would impose roughly 10% in interest and late charges. And let’s say you were not able to make several subsequent payments and everything kept compounding at 10% a month. Do you know how much you would owe the credit card company at the end of one year? A whopping PHP313,843 or thereabouts. Doesn’t that seem a bit excessive? Usurious? Absurd?

Technically, banks are supposed to classify debts overdue for more than six months as bad debts and provision against them to write them off, in practice, there may be ways to stretch that rule.

Dictionary definition of usury – “the practice of lending money and charging the borrower an exorbitant, excessive or illegally high interest rate.”

Other Interesting Pieces of the Philippine Credit Card Story

“The rate of consumer credit defaults in the Philippines is almost TRIPLE the average in Asia” (Malaya, 2008)

“The credit card interest rates in the Philippines are currently amongst the HIGHEST in the world…in effect, good borrowers are shouldering a significant portion of the premium on bad debts since, given the lack of credit data that would permit lenders to determine the quality of borrowers, high interest rates are levied on ALL credit card debt.” (Winecito L Tan, BSP in his paper entitled “Consumer Credit in the Philippines”)

Below, a very interesting graph that compares the composition of household debt across 11 Asian countries in 2008. One of the most glaring conclusions is that the Philippines has the highest percentage (@28%) of all household debt in the form of unsecured credit card loans, and lowest percentage of housing loans among all countries in the study. This is probably one reason that the growth in credit card exposure has slowed dramatically in the last 3 years.

Graph is from Household Indebtedness and its implications for financial stability, a paper by Don Narkornthab, Bank of Thailand.


This is the first of a series of several posts on credit cards in the Philippines. There are 6.7 million cards issued for roughly 4.0 million people. Most of these people fall into the top 10% of the income levels for the Philippine population. There are roughly PHP135 Billion in credit card receivables. I figure that roughly 2 million people could have upwards of PHP60,000 in average revolving balances on their credit cards every month, and are paying upwards of PHP30-40,000 in interest rates, late payment fees, and other fees per capita per annum. Some 15% of all outstandings are past due, down from historical highs above 20% several years ago. Interest rates of 3-3.5% per month are the equivalent of 51+% per year compounded, and when you add in penalties and other fees, could rise to as high as 200+% per year. Credit card fraud and defaults are very high in the Philippines (suggesting banks should choose their clients more wisely), interest rates are amongst the highest in the world, and household debt in the Philippines relies VERY HEAVILY on unsecured credit card debt.

Stay tuned for more in this series in the days ahead. Do me a great big favor and let your friends, colleagues and family know about this series of posts. Over the next month, on a normal basis, this post will get 15-20,000 page views from regulars and casual visitors. But this is a topic that should interest anyone who holds a Philippine credit card, and thus it would be good if the maximum number of people were aware of this series of posts. If all of you posted this on your facebooks, tweeted about it, copied the posts and added them to your own blogs or websites, then there is a pretty good chance that 150-200,000 people will get to see it. Who knows, they might just learn something useful and avoid getting into credit trouble or know how to better assert their rights as a consumer as a result of reading a few posts. If you know any newspaper columnists, writers, newscasters, broadcasters, who can help to bring further awareness to these issues, I would be more than happy to share as much as I know about the topic with them if that can help the public at large. Thank you.


Consumer Credit in the Philippines, 2008 Winecito L. Tan, BSP (A Paper prepared for a speech at the Bank for International Settlements
Issues on Revenue Recognition Practices of Selected Philippine Credit Card Companies, 2004 Erlinda S Echanis, Professor of Accounting & Finance, University of the Philippines
Household Indebtedness and Its Implications for Financial Stability, 2008 Don Nakornthab, Bank of Thailand
BSP Adopts same collection practices for all consumer loans, 2011 Lee C. Chipiongan, Philippine Development Finance
Credit Card Holders Cry Out For Reforms, 2009 Ramon J. Farolan, Philippine Daily Inquirer
Stanchart sees slower credit card growth, 2008 Gerard S dela Pena, Businessworld
Credit card receivables up 4.9% to PHP136 Billion in first half, 2010 Lawrence Agcaoili, The Philippines Star
Card Companies: Use credit wisely, 2010 Jarius Bondoc, The Philippine Star

Interested in reading the rest of the series? Click here:

Part II – Credit Limits


84 Responses

  1. Can’t wait for the part 2. This blog is educating enough, but sadly few people really understand the fine prints when they signed up for a credit card.

  2. I use my PH credit card more than I use cash in Manila as I like earning points to supplement my airline mileage. It’s definitely indispensable for ease of online and overseas transactions (but I use a local credit card if I am based longer in a particular country) too. I do pay in full, though, and I noticed that in the past couple of years or so, my PH credit card company is no longer charging me for annual membership fee, so I am hoping that I am not amongst the “…good borrowers shouldering a significant portion of the premium on bad debts…” PH ranking up high on credit card debt came us no surprise to me but it is very interesting to note, indeed, that we have the lowest percentage of mortgage debt too….we all rent, inherit our properties, buy property in cash, or use CC to buy properties? :)

  3. Thanks MM for compiling all of these information.

    I think the reason why there is an increase in the number of credit cards these past few years is because the banks have been very agressive in getting new clients. I’ve gotten so many calls from banks offering free credit cards and if you tell them that you’re not interested they will pester you to give them the contact number of people you know (which I don’t). They’ve also stepped up on the freebies that they give away which could attract some people.

    I only have 1 credit card and I’m one of those people who pay off the entire amount when the bill arrives. I think of my card as a representation of my cash on hand. If I don’t have the equivalent cash for the item that I’m planning to purchase via credit card then I don’t buy it. I don’t want to buy something that I can’t pay for now. I’ve seen in a friend what happens when your debt accumulates so badly that you can only afford to pay the interest. It got to the point that his parents had to bail him out of his debt.

  4. I have only one credit card, but was and still being offered several other cards from different banks, which I find really annoying. I really get irritated by in-your-face agents in the malls, I find them mostly rude and obnoxious… It’s like playing patintero with them in the mall!

    Agent: Ma’am, do you have a credit card? *blocks the way*
    Me: Yes, I’m happy with it thanks. *small smile while trying to walk away*
    Agent: Sige na ma’am, Citibank is the best. *still blocking the way*
    Me: No thanks, sorry. *now getting annoyed, struggling to walk away*
    Agent: Okaaaay… I’m sure supermarket card lang yan. *scoffing and laughs with other agents*

    WHAT THE?!!! Instant high blood.

    I’m thankful that HSBC is fairly easy to deal with. The only issue I encountered was a delayed billing which caused me to miss my due date (different date per billing, but around the same week) and the courier claimed my dad signed for it, which he never did. It turns out it was the courier’s fault and mishap. The courier personnel assigned in our area even asked me to forgive him and asked if their company would rather compensate for the penalty (HSBC hires a local courier service). I was shocked because my business would only be with the bank, not with their hired courier. I told him to better talk to the bank, because his actions are violating the card holder’s privacy. I reported this to HSBC, fearing for my security (the courier knows where I live for crissakes!) willingly reversed the financial charge and made a formal report. I don’t know if they changed courier, but so far, everything is fine.

  5. KAi, wait until I do the dedicated post on couriers, you will be shocked or amused or disgusted…take your pick. :)

  6. Thus, I always settle my credit card debt in full every month. I admit that a preference for using my credit card over cash arose due to the rewards points I would accrue.

  7. My family’s finances are deeply affected by those credit cards, well i would see a lot demand letters and thugs going to our residence just to threaten us to pay up. Probably when we’re out of this situation I’ll not use any of those plastic card death wishes.

    I’ve seen a documentary by BBC that shows a lot of people (a lot being driven into suicide) being in the mercy of those usurers that they call proclaim themselves as a helping hand to those who are in need. A high bank official who went into a state anonymity told the documentary that he/she was very disappointed on how these banks run and destroy the lives of these poor customers.

  8. Juan, you will be interested to read my post on new Central Bank regulations on how bank’s collect bad loans and what they are NOT allowed to do, so wait for that and make sure you assert your rights against any illegal harassment or scare tactics if that is what you have been experiencing. So many posts to write in the days ahead. I too, feel for the ones who are least able to protect themselves and who get sucked into the vortex of a dangerous debt spiral. The problem is two-fold, however, people borrowing more than they can afford to, banks that give the “easy” credit despite their careful checks on the creditworthiness of a client, and the sometimes horrible things that happen when a client is unable to repay on schedule, including the exorbitant interest rates and penalties charged.

  9. Love that you care enough about your readers to share this. I used to be in the business so I know better than to revolve.

    Some people have this mistaken notion that if they pay just the minimum amount due they’ll be ok. They should check their statements, and they’ll realize that the interest, fees and other charges are almost the same amount as the minimum amount due, give or take a few hundred. Meaning, they’ll never be able to pay off their debt if they just pay the minimum. Suze Orman, the financial adviser once wrote that if you pay just the minimum balance on you card it will take you about 20 years to pay off your debt. And that’s in the US where the APR is like 1% (12-14%?). Imagine how long it will take you to pay off your debt here in the Philippines where the APR is 42%!!

    And the most horrifying thing a person can do with their credit card? Take out a cash advance!!! The interest on a cash advance is compounded daily, and the fees are absolutely crazy. It’s worse than 5-6.

  10. This is really helpful.

    Credit cards messed up my life. I was charged interests on interests on interests when I was having a hard time paying my credit card bills. In fact, I converted my outstanding balance to their payeasy program so that I could pay it in installment monthly. They said they would charge a one time interest of 3.5% monthly, thus, 84% for 24 mos. more or less. As far as I could remember, my balance was 70k, then it was converted to 110k, which means a shocking 40k in interests was charged to me upon conversion! And they still effing call it PAY EASY?! tsk tsk tsk..

  11. Please write about the fact that holders of credit cards issued in Philippines are not adequately protected against fraudulent purchases. I have a friend whose credit card was snitched from his gym bag. It was only after 12 hours that he noticed that his credit card was missing. He immediately reported the loss to the credit card company. However, at the end of the month, he received a bill for PhP 150,000. Obviously, the thief had a shopping spree with the stolen card. My friend naturally disputed the charges only to be told days later that the loss was his fault and he is accountable for all charges.

  12. I’ve been reading a lot about credit cards these days, but most of the ones I’ve found apply to the US or Europe only. This is a very informative article. Thank you so much for this. I’ve never had a CC, and was toying with the idea of getting one but this is making me think twice.

  13. Some stores tack on a “surcharge” of x% of the cash price when paying with a credit card. I’ve read somewhere that this is a violation of the merchant agreement. Can I insist on not paying the “surcharge” and what are my remedies if the store won’t budge?

  14. I was gonna get my first credit card sana. Pero after this … wag nalang. I dont have utang pa naman. I’ll pay in cash nalang.

  15. my dad’s finances were in bad shape after getting a cash advance from Citibank and Bankard…that’s why he had to go back and work abroad :( so that he can pay it off and not affect the family’s finances…good thing my mom is good at haggling (we asked for a deal if we paid in cash the whole amount)…the amounts needed to be paid was dramatically slashed by at least PHP30K!

    MM.. BDO issues credit card for depositors with at least PHP5k in their account, and the credit limit is PHP20K

  16. Many thanks, Marketman for this post. I’ll post your link in my Facebook page. I’m sure a lot of people will benefit from your research.

  17. Thanks for this article. It gives me a lot of thinking about using my one and only card. I simply just want to have a fluid finances.

  18. Will wait for that post MM.

    I’m really bothered how the courier had the audacity to talk to me to make amends. His intention might be good, but it’s unnerving. What if he goes into a vindictive streak? :o/

  19. this post is very educational & informative. i myself is a card holder and is still counting my first yr as being so, until then i have to decide whether to continue with having a credit card or not, convenient it is but not a good financial habit.

  20. this is very informative, MM. thank you. will definitely share this to family and friends!

  21. This is very relevant and timely, MM. We (parents and schools) should teach our youngsters how to be financially responsible, manage a personal budget, even manage a checking account!

  22. When my credit card was first issued, the limit was about P80,000. I retain this card for emergency purposes and gas purchases only. This card helped us a lot especially when one of the family members had a medical condition, the hospital bills are piling up, and medicines from the hospital pharmacies are way overpriced as compared to the drugstores. We made sure everything was fully paid so that interests will not bury us further more. After a month or so, I was sent in the US for 20 months. While I was there, the need for online purchases are unavoidable. I wasn’t informed that the interest and fees would also be in USD! Hah! And they increased my limit to more than double.. Another hah! Prior to going back in the country, I requested to lower the limit back to 80,000. Good thing they did, because one day I lost my wallet. I called immediately the CS of the bank, and talking to a customer representative of this bank is a pain in the “back”. In the end, I saved my day, because being a paranoid myself, I took an extra precaution of writing at the back of the card “PLEASE ASK FOR IDENTIFICATION”. The crook who stole it must be disappointed because I never put IDs on wallets. Bleeh! ;-)

    This is a very informative post MM. Thank you. I was waiting for this, and will wait for the other posts before I send it over to friends and family in the US and Europe who retains PH issued CCs.

    So I guess, credit card exposure declines in the past years that’s why some banks are so desperate and send me and my husband another credit card without applying… pre-approved, eh? We politely send both cards back to where they belong… the bank!

    Again, Thank you MM. This is a big help. May the force be with you.. hehe.

  23. Since we are now enforcing the law that for straight payments, the price of the goods being sold should be the same whether paid for by cash or by card.

    Loophole: “here is the card price, cash price is discounted” when in fact the cash price is the regular price.

  24. Correct me if I’m wrong but I believe interest rates, in general, are high in Philippines. This is not limited to credit card loans. I have only 1 credit card and it’s the one I’ve been using ever since I graduated from university many many moons ago. I’ve been quite happy with the service; even on rare occasions when I was late by 2 or 3 days (but always paying in full), it would only take 1 phone call for them to waive the surcharges. No hassles. You raise valid points, but I believe a greater part of the debt problem is financial irresponsibility of the borrower.

  25. I do not have a credit card and whatever plans of owning one will depend on this series of posts. I’m at 85% not wanting one.

  26. Are there usury laws in the Philippines ? Back when I worked there around 1981-82 (?); the central bank actually removed any ceiling to the interest rate that can be charged on loans. What is the maximum interest rate allowed by law today ?

  27. Here in Singapore, I use credit card for convenience and business related expenses not as a means to extend your financial reach. I have 4 card each one has different purpose and so far I never pay for any annual fee nor any finance charges, if ever they insist I told them to cut the card and immediately they will waive it. I would say I gain more from them as I get more discount, freebies, points for my air mileage enough for my whole family to have a free ticket every year.

    I do use credit card to pay for my car expenses, house utilities, dining, insurance, medical, shopping/groceries, air ticket, hotel and many more….oh one last important thing pay everything every month. Bills are all accessible online and I do pay them online too.

    Security wise we are well protected, every time you use it for on line purchase you are required to enter a second authentication password send via SMS to your register phone. It will also send an SMS for purchase if you use it overseas. So far (touchwood) I never had a problem on wrong billing.

  28. Indeed a very timely post, MM. This article gives me an insight on how the credit card system works in the Philippines. I reside in the US, the land of debt.

    I saw a documentary last night called “Maxed Out”, depicting the travails of those who love to make “utang”. Interesting to see credit card induced suicide. Yes, 2 college students killed themselves as collectors started harassing them. I hope CC companies will not be allowed to recruit in universities there. God forbid!

    I have always paid my CC debt in full every month. I don’t believe in paying for interest. If I can’t pay for that designer purse up front, I can’t afford it. That’s what my Dad always said. It’s nice to accumulate points and I use that to buy Christmas gifts. Free flights are nice, too. I use them to visit relatives. Frankly, I don’t even know how much the APR on my CC is if you asked me right now.

    The thing is, CC’s are not evil, it’s the way you use them that matters.

    BTW, while visiting MNL one time, I got “accosted” by one of those CC mall solicitors offering me a “free” credit card. I just simply told him in an donya accent “marami akong pera, di kailangan mangutang, now get out of my way!” LOL!

  29. Mr MM I’m thankful to your post a while back regarding your experience on credit card issued in the Philippines and the card holders’ liability if the cards identity (number) was stolen. I had an HSBC credit card then and closed the account immediately. I opened a Philippine issued credit card for convenience to furnish a vacation home in Makati. Recently I was in Manila and my card number was stolen from a merchant in Makati. Since my card was issued in USA I was able to reverse all the stolen charges $5972.26 immediately. The card holders in USA has decent consumer protection laws.

  30. Hi MM, I hope your CC series will include a section on those pesky Citibank agents posted in Rustan’s harrassing shoppers! I’ve already asked the Manager to ask the agents to be less persistent but I haven’t been successful. Maybe the Tantocos are Citibank investors….

  31. Tricia, thanks for that link! MP, wait till you read about the new laws that prohibit pre-approved cards, and more stringent rules on collection of receivables… charly, glad to have been of help. If it were a local card that charged the %5900+ worth, you would be liable almost for sure. tnm, I would add to the “credit cards are not evil, it’s how you use them that matters” and say, wait and read the series and you may think instead “Some Philippine issued credit cards may be a bit evil, and yes, it’s how you use them that matters”… :) flip4ever, yes, there is no cap on bank interest rates, and I am not sure if there is a specific law on usury and a number associated with it (doubt it), but usury in general is defined as charging excessive interest… and in a relatively recent Supreme Court ruling on a SPECIFIC case, they ruled that the excessive interest rate and the penalty charges (10+% per month) were excessive and they lowered the amounts to 1% per month. It was a landmark case, and now people just have to keep at it and get the precedent turned into regular practice and possibly a law… I do not advocate a cap on interest rates, but I do advocate several other things that might make sense…but more on that in succeeding posts. lee, there are probably 8-12 more posts coming in the series… Gigi, yes, you are right in the sense that interest rates are higher in the Philippines. But credit card rates here are astronomical. You can now get home loans for as little as 5.75% with the more common rate being 7-8%, you can get corporate loans both secured and unsecured from 7-10% depending on the company, these are at most, a couple or so percent above the most developed western markets right now. But most common credit cards now charge 3.0-3.5% per month in the Philippines, which translates to as high as 51% compounded annual interest rate. In the U.S., I believe the going rate is between 12-14% annual interest rate. So the Philippines is over 3x more expensive for credit card loans. It may actually be cheaper to go to a PAWNSHOP these days as their penalties etc. may not be as onerous as credit card companies. Of course, a pawnshop takes some form of collateral, like your engagement ring, watch, necklace, etc. Fleeb, when you want to purchase something, ask for “the price” and if they say PHP1000, then take out your credit card and purchase it. If they insist on saying there is a credit card price that is higher, then tell them that you will report the store to the DTI (relatively easy to do, just write a letter) and to the credit card company. If the salesperson seems tentative, tell her to call her manager and repeat what you said regarding a complaint to the DTI and credit card company. They should let you charge on the first price quoted. I have never had to pay a premium on credit cards in the past 2-3 years. And yes, I have actually filed a complaint with the credit card company while standing inside the store so that the manager could hear me on my cell phone. It cost me the call, but it was worth the look of anxiety on the manager’s face, particularly as I asked for his name to be placed on record with my complaint. Sounds like a whole lot of hullabaloo, but if you don’t assert your consumer rights, you get treated shabbily around these parts. Matilda, from what I understand, new circulars or laws prohibit or strongly discourage pre-approved cards starting this month or last month, will have to look that up. Chinky, I totally agree. Kids should learn to manage their money as soon as they can count. denise, wow! I didn’t know that a fairly modest deposit could get you a card with 4x the buying power… seems dicey to me. whackerZ, see my comments above re: “surcharges” Ted, I wrote a post on that topic before, it’s in the archives and I will refer to it again in this series of posts… google “marketman philippine credit cards” and it should come out.

  32. Since I live away from Manila, a credit card is convenient for online purchases for air tickets, books, conference registration, etc. and when I am in Manila, for buying gas, groceries and restaurant meals. I treat my credit card like a debit card as I make sure that I have available funds to make the card payment for any charges Ii make. I am so paranoid about having to pay interest and finance charges that I pay my bills on time. In fact, I pay them even before the bill comes.

    I have used the points to add to my air miles and redeemed many award air tickets. I only use 1 credit card because I feel that the company tries to protect me by calling me if there are suspicious charges, like charges made overseas when I’m supposed to be in Manila or huge charges I make payable to an overseas merchant. Interesting that I now have to make “paalam” (inform the credit card company) that I will be overseas on such dates so it won’t block my overseas charges. So far, so good.

  33. moni, it will be interesting to see if the local credit card we have decided to use the most is the same one you have chosen, but more on that later. atbnorge, thanks!

  34. I have just checked some viewer statistics and nearly 20,000 page views of this post occurred in less than 20 hours! Thank you all for spreading the word. I posted this article midday on a Friday, which together with Saturday is traditionally the slowest period on the blog. But this response is 2-3x the normal traffic for a Friday post, and particularly one without a photo. You guys are spending 2-3x longer reading the post and the comments and I am receiving a lot of mail from first time commenters and readers. At this pace, I estimate that maybe 40,000-50,000 people will see this post within the next 2-4 weeks. And I hope it helps some of them to manage their credit card affairs better. But it’s early goings, and I am only starting. When all is said and done, I will be extremely pleased if the series is read by 150,000-200,000 folks over the next couple of weeks. Education is indeed powerful.

  35. If loan sharks were charging the same rates as the credit cards do, that would be usurious. But interestingly enough in the Philippines, BOTH lending industries are striving, indicative of the desperate times (and the very low financial management skills, for those who revolve their credit WITHOUT an emergency).

    I am aghast at how my employees (and those of my neighboring businesses) borrow from loan sharks where up to 15% are already deducted as the loan is give to you, i.e., you get 850 for a 1,000 loan AND as the interest starts to pile up.

    It’s high time something is done about this (had a friend who dropped a credit card last month and racked up 150k worth of purchases by the finder – we’re not even talking of a professional thief). Do you see salespeople bothering to check your signature against your card’s? Do they ever ask you for an ID? What happened to those credit cards with pics on it? I’m sure it doesn’t cost that much extra.

  36. MM, may I put a link to this on my FB and the all subsequent posts you are doing on this subject? Thank you.

  37. This is a jaw-dropping post. No consumer protection for unauthorized card usage? No limit on interest rates? But still minimum interest is charged at rates to suggest that it should be high enough to cover losses on cards, including fraudulent usage.

    The only number I would quibble with is that in the States you’d have to have VERY good credit – totally unblemished in any way – to get rates in the 12-14% range. 18-22% is far more common, upwards of 30% if you miss a payment, or if the issuer runs a credit report and sees you were late on a telephone or cable bill. You then get labeled as high risk and charged accordingly, even if you’ve not been late on your credit card payment or gone over the limit.

    A decade ago or so when these “delinquency” rates became more common practice, I began sending in separate payments at the first of the month for what the minimum payments should be – before receiving my bills – then paying the rest by the due date as a form of self-protection. Online payment systems have taken away the necessity of that now, but the point remains. Once you open a credit card account, you take on the responsibility to adhere to the repayment terms, no matter what it takes.

    I don’t have an answer for what to do when the banks start your account with rates that should be reserved only for those who are chronically delinquent, as seems is the state of affairs in the Philippines, other than muster up the forces to call for governmental intervention. Kudos for doing so!

  38. MM, about 3 years ago, my son’s credit card (the same company I use) was stolen in the locker of Fitness First. The thief had a shopping spree in Greenbelt and racked up about P30,000 purchases. When my son reported the loss of his credit card to the company, they blocked the card but he was told that he had to pay for those charges. Perhaps, recently this credit card company is starting to improve its services by beefing up its security. But losing a card in the Philippines, as your post and many readers have pointed out, is unprotected and is tantamount to being held up in broad day light. So each time, this company calls me to verify recent suspicious charges, it puts a smile on my face.

    Perhaps, there should be insurance for credit card theft or loss in the Philippines to protect us all.

  39. moni, how horrible is that. In the case of a stolen card in the U.S. maximum liability is $50 at MOST. Westy, click this link for last week’s average American APR which was 14.83% nationwide. So I think the 12-14% quoted above, for good customers is definitely realistic still. And yes, poor credit rating results in higher interest rates. And that’s how it should be. Risk and return trade-offs. Why should conscientious and timely customers have to pay for the deadbeats? That’s what happens in the Philippines. The same concept applies to car insurance in the Philippines, if I have never had an accident in 25 years nor put in a claim for damage to vehicle, I STILL PAY the same premium as the neighbor who figures in a car accident once a year. In fact, I have had an insurance agent once tell a nephew after he had a bad car collision (but not bad enough apparently) that the next time, he should just bang up the car some more so that he can get a full replacement instead of repairs. How absurd is that? bearhug, absolutely. The more people put this on their facebooks and tweet about it, the more likely a couple of hundred thousand folks will be reached. Thanks. teenbreedmountaindog, I hear some chic type loan sharks lend at 15% per month, or effectively 435% interest compounded annually. And government and citizens think that isn’t usurious?… yikes! :(

  40. I’m just curious why people have to pay for lost card transactions. Can’t it be contested and have the merchant charge slip retrieved then have the signatures compared?

    In the past year, 3 credit cards within my family was replaced by the credit card company because security was compromised (3 different person, 3 different credit card companies) – makes me wonder what level of security our banks have! All the cards have remained within our physical possession all throughout. Two of the cards were never used for online transactions. Of the 3 cards, only one incurred actual charges – 10 plane tickets on Cebu Pacific to Malaysia. The charges were reversed – we left it with our account officer to deal with it.

    An interesting situation I encountered with citibank though was the charging of the “over-the-credit limit” fee. They charged me P 500 after they allowed charges above my credit limit to go through . . . I argued that the credit limit is there to protect my account and that they should have just declined the transaction if I went over the limit. They countered that they don’t want to put me in an embarrassing position of having my card declined. I said I’d rather be “embarrassed” than charged P 500. The fee was eventually reversed . . . what was interesting though was when I asked the basis of the charging. They pointed me to the terms and conditions and there is apparently a catch all clause about bank levying charges as needed.

  41. roseannecres, you are reading my mind, watch for the next few posts that cover credit limits and overlimit fees. juan, thank you for that link, I hope local investigative or news type programs take note of this and do their own exposes as it were of doubtful credit card practices. As for Citibank in Jakarta being banned from issuing new credit cards link up top, due alleged rough handling by debt collectors, kudos to Indonesian Central Bank authorities for acting swiftly and in this case, appearing to side with consumers first… I worked for nearly 5 years in Indonesia and occasionally with the CB senior officers, I applaud them for taking what appear to be more stringent steps than our own government seem to be able to do so, so far…

  42. Hi MM:

    I didn’t see the link in your post, but when I look here:

    I see the 14.83% number with average offers of 10.99 to 20.99% for “excellent” credit ratings, with an asterisk indicating the rates are variable. It’s a highly misleading indicator.

    When the GFC hit in 2008, all of my credit limits were reduced, even though I had excellent credit and a stable job. I cut up the one that raised my rate 8% for no reason whatsoever other than as a preventative measure against the state of the economy and the bank’s huge real estate losses. That 8% rise wouldn’t be caught in the “average offered rate” listed by that website.

  43. westy, yes, I forgot the link, sorry. I have update the post. But that is the post indeed. I have a U.S. AT&T Universal Card (Mastercard) that I have had since they offered the no-fee card some 20+ years ago. I rarely use it except when traveling and always pay off my balances. I just checked on-line and my personal APR for purchases is in fact 14.24%. Below the national average, and with little in the way of a credit history in the U.S., other than I haven’t had a credit history to speak of as I have never ever borrowed anything. :)

  44. I just looked at my statement as well as the bank leaflet on savings interest rates.
    The high interest rates banks charge on credit cards are in stark contrast to the down in the mud interest rates they give on savings accounts and time deposits.
    Savings interest rates are now .5 % per annum.
    I have two cards, one with a 2.75 % monthly finance charge. That’s an effective interest of 38.4 % p.a.
    The other one has a finance charge of 3.25% or an effective rate of 46.78% p.a.
    Just comparing Savings interest rates and credit card interest rates, thats a spread of about 98.6 – 98.9%! Credit card finance charges are therefore around 76 – 93 times or 7,600 – 9,300 % higher than interest paid on savings accounts! And this does not even consider the other charges, like late payment charges (another 5% per month), higher interest on cash advances (5% per month).
    Notice too that while savings interest rates are expressed in per annum terms, the monthly finance charges are not expressed in per annum terms as well? I doubt whether people realize that these are the effective interest rates of credit card finance charges.
    Another thing I learned before about how credit card companies charge interest is that, if only a portion of the credit card balance is paid, the interest is charged on ALL purchases, even the portion that was paid. Isn’t it right to only charge interest on the unpaid portion? Anyway, if the whole amount is paid, no interest is charged, right? Is this being done in other countries as well?
    That’s why I pay the whole amount in my statement all the time, to avoid these charges.
    This is a long shot, but I can’t help but think of how jeepney and tricycle drivers are prevented from increasing their measly fares, even in the face of escalating fuel costs. Yet these giant conglomerates can charge these rates on their already profitable operations.
    It’s so easy to regulate the small guys who already live at poverty levels. How about the big ones?

  45. Thank you for this in-depth post! Will definitely share this.
    In our household, I am the one in charge of paying the bills and so as not to get charged with huge interests, I pay all our credit card dues in full and on time. I missed a few days from the due date before and the figures are just ridiculously high, from late payment penalty + interest on the total charged amount! :<

  46. MM…re:BDO credit cards…yeah my mom was surprised when it came in the mail! and that was a month or two after opening the account! i have one too, but this was almost 2 years after I had opened my account (and the only Philippine-issued card I have)

    re: sharing this post…i’ve seen a friend or two share this on Facebook as well :)

    in Dubai, they are also quite persistent if you are just a day or two late in payment, they would call you on all the phone numbers you have provided, they would call the references you’ve provided, and they will send SMS and email…I guess with the financial crisis Dubai is under, it’s pretty understandable they go bat-shit crazy if you are late in paying. Good thing the only other credit card I have (it came with the ATM for our salary), the limit is less than half of what I earn now, so it’s still pretty manageable even if I go on “shopaholic” mode. and i try to pay it in full or at least more than triple the minimum payment required.

  47. Have you seen the PBS Frontline documentary “Secret History of the Credit Card” –
    This was made a few years ago and some legislation has been passed in the US to try and address some of the problems but it is educational in terms of why banks/credit card companies do what they do. To think this is in a market where sophisticated credit reporting and rating agencies exist; so I can imagine how much more problematic it is in the Philippines.

  48. Your post is excellent in bring the attention for your readers. It is sad that most people who can least afford it, use these credit cards without realizing the ramifications of compound interest, penalties and other fees. I hope everyone takes this to heart.

    I’m an avid user of credit cards for I have a good control on my spending and where it goes. I have several cards that I use. In my previous career, many moons ago, I had to write computer programs for a financial institute where, I had to learn everything there was to know about interest rates, compounding, etc. This is when I found out how much money these financial institutions make from naive customers. They were not going to make it from me.

    I few points that I want to make. 1) Read the fine print that comes with the card outlining the regulations and liabilities, etc. I underlined each regulation that is of concern to me. 2) I have set up an automatic payment for each credit card on the due date and the outstanding balance is 100% paid in full. This way I do not get charged for late payment or for a revolving balance. Even if I am away, the total outstanding balance is automatically paid. 3) If I cannot afford it, I do not buy the item. I use the credit card as a convenience only and to receive points. I also need it for my online shopping. 4) When the statement comes in, I review it in detail; each and every entry is compared to my receipt. I’m compulsive in keeping all my receipts. I then staple the receipts to the statement and file. Errors are immediately reported. Sometimes we talk to the merchant, who then reverses that error; else we notify the issuing bank. I only receive online copies of all my credit card statements. In between billing cycles we look, using online (credit card website) services, at our transaction to see if anything looks suspicious.

    I have used credit cards for over 35 years. I have experience two cases of fraud, once in the Philippines to the tune of PHP 350,000 and once in Canada a much smaller amount, less that CAD 1000.00. In both cases, other than aggravation, I have not had to pay for anything that I did not owe. I have caught many mistakes and all have been reversed in my favor. I always keep all receipts for proof. In the older days when the receipts were hand written, cheaters would change 3’s to 8’s and other such things, but although this happened to me several times, the resolutions was always in my favor. Hence, keep your receipts.

  49. Furthermore: We did not have a card stolen, but in the Philippines someone was charging PHP 350,000 against the card, yet it was in our possession. It was a Philippine issued card. We’re not sure how they got the number. But the bank, reversed the fraudulent charges, closed the account and immediately reissued a new card with a new number. We had no penalties, but it was a nuisance.

  50. Dreaming, hi, I know you, right? In your case, if I recall correctly the local issued card was an American Express (possibly platinum, is that right?) and they are lightyears BETTER than any local bank or foreign bank… Today, I think Amex is now issued by BDO, or at least local ones are issued by BDO, so I wonder if they are as customer friendly. I love my own Amex, have had it for 25 years, 21 years as a Platinum card holder, and it is so worth the higher annual fees. I once set up a corporate office in Jakarta and charged nearly all the business expenses for set-up on my card, and for nearly a decade afterwards me and Mrs. MM were never even charged an annual fee! On another occasion, on a trip to Europe and a family emergency in Manila, Amex Platinum staff called at 3am Rome time, basically moved heaven and earth to get us back to Manila in the shortest time possible — they arranged transfers to the airport, bought and handed us our tickets, made sure we were fine all along the way, and even took our original itinerary and cancelled all hotels and airfares with NO penalties charged. For that incident alone, I am loyal to them even in lean years where we barely use the card… They do indeed understand service far better than the mass issuers. And ultimately, they (Amex) are NOT a credit card for the most part, as you have to pay off the entire balance and they don’t make the bulk of their money on the revolving balances like other bank issuers (though they have one product that does revolve balances I think)… :)

  51. Was it a particularly horrid local credit card experience that triggered this series?

  52. JE, credit cards, usury, taking advantage of people who can least afford it have always been a pet peeve. So is outrageously bad and sloppy service (sometimes understandable) combined with non-existent recovery capabilities (not acceptable). And yes, the trigger for this series was a bad, bad credit card experience. But the objective is to make sure others are more aware so they can manage their credit affairs more carefully.

  53. mr. mm, have you heard about francis bryan ang, the citibank executive in their binondo branch that embezzled more than 100 million pesos last year? his dad is a councilor in the 3rd district of manila and the guy ran for xavier school alumni association board during the same time (between july to august last year) when the bank discovered his anomalies while his rich chinese clients don’t even want to press charges pending settlement from citibank. it was reported by the media during the time of the manila hostage crisis so it wasn’t given much importance.

    these things usually happened every few years within the chinese community, katulad ng kay dewey dee and others.

  54. Hi MM, the reason I asked if you will discuss pre-approved CC offers by Citibank is because their (too) aggressive push is a clear indication of how ‘desperate’ they are to get new clients, which of course translate to more earnings.

    In any case, I also had a similar great customer service experience with HSBC when I lost my platinum card in Brussels. I was amazed with how attentive and helpful they were. I couldn’t remember my account number (who does?) and all I did was give them the name of my Relationship Manager then they took care of everything! A friend said HSBC accorded me exceptional service because I’m a Premier member but another friend who is not a Premier account holder also had a similar experience and received the same attentive service from HSBC (albeit without the espresso and scone at their Lounge!). I also appreciate that they bother to call when they see too many charges logged from different countries over a short period (as what happened when I was travelling in Europe). Customer service and protection are priorities of HSBC that’s why I am loyal to them.

    Anyhow, thanks for the post MM, I’ve already informed family and friends to follow your series.

  55. dreaming, bank traced the fraudulent transaction to a skimming scheme in a gasoline station.

  56. I actively use 4 local credit cards right now – BPI, Amex, Citibank and Metrobank.

    Of these 4, I actually find BPI easiest to deal with. They have been quite considerate in waiving fees – I’ve been using their cards for 15 years now and I think I only paid annual fees for the first 2 to 3 years. 2 years ago they’ve made it official that they’re waiving my annual fee charges for life. They have been considerate for the few times I’ve missed paying on time (I tell them the truth “nakalimutan ko”) and have waived all interest & financial charges. For forex transactions, I believe they’re the lowest among my cards. I use their cards extensively for online transactions and security have so far been ok. I appreciate that they are very diligent with checking unusual transactions. Overall, they get things done. They’re not flashy but steady and solid – typical Ayala company.

    As for Amex, I like that their call centers answer phone quickly and returns call as needed. I like that they clearly stipulate that with a specific annual spend – fees are automatically waived. I do wonder about their system / security though. In the 3 years I’ve had the card, they’ve changed my card twice already. Their reason “card security was compromised” This has never happened with my BPI card which I use for most of my transactions (online and retail) As for their service, I have a feeling AMEX service here may not be up to par with AMEX service elsewhere simply because I don’t feel anything special / blown away by their services – just my feeling.

    Citibank . . . I actually have the most contentious relationship with Citibank among all my credit card providers. As mentioned above, I had an issue with them re: over the credit limit fee. Two weeks ago, my issue was the annual fee waiver. For the past years, they’ve consistently waived my annual fees. This year – they just won’t. My spending with them went up last year because of their promos, I always pay in full and on time so I really don’t know why they won’t waived it this year. A couple of my friends have encountered similar resistance and have opted to cancel their cards. We were discussing that citibank seems to have this hot-cold-hot-cold cycle. They’ll have years where they practically shoved their cards down everyone’s throat and then there will be years when they’re Uncle Scrooge incarnate.

    A few years back, I had a merchant overseas split my transaction equally between BPI and Citibank. The exchange rate difference was close to a peso per dollar! (if memory serves me right the difference was equivalent to 2%.) same transaction date, same posting date. Have never used Citibank for any overseas transaction after that.

    Metrobank – well I don’t really use it except for auto debit transactions but I just find it funny that every time I request for annual fee waiver they’ll ask me to spend P 4000 within a month and it’s waived.

    I decided to share my experience in the hope that other readers can maximize their privileges. Yes, some banks are willing to waived fees – we just have to ask.

    MM, really glad that you started this series. I used to work in a multinational company where only the “best and the brightest” are hired and was shocked to learn several colleagues got into financial mess because of credit card mismanagement. Consumer education is really critical. Credit cards can be wonderful financial instruments – if used properly.

  57. I’m not privy to the details but will share only what I know for sure.

    A friend who got into a credit card mess went to her bank, sat down and discussed ways with the bank to settle her bill. They agreed on a plan which included suspending further compounding of interest, waiving of some fees and working out a repayment timetable. It took my friend more than one year to repay her debts but she did it. She pays everything by cash now.

    Yes, this happened in the Philippines.

    Her story is so far the only one I’ve heard of in the Philippines. In fact when she told me I was shocked – shocked that she was in a credit card mess and shocked that there are apparently banks / bank personnel that are kind enough to bridge things.

  58. Thanks for this post MM! I have horrid credit card tales as well. Once, my bestfriend had her wallet stolen. As soon as she found out, she tried to call the bank and had her CC cancelled. (The theft and the reporting occured less than 2hrs apart.) Alas, the CC hotline of that bank was already closed for the day (seriously, they tell you to call them anytime and you get a recording saying they only operate from 8am-5pm daily. Pffft!) So the next day when she finally managed to contact the bank, the agent informed her that some Php8,000 was already charged to her CC. She tried to reason with the bank saying her CC was stolen and that she was unable to reach anyone via their hotline. Lo and behold, the bank insisted she pay all the charges. Not wanting to have bad credit records, she ended up paying the charges made.

    I hope some legislators or people close them reads these series of posts you are doing. We, as consumers, should be protected from skyhigh interest rates and other charges. It still surprises me how a 3rd world country like ours end up with one of the highest CC interest rates in Asia.

  59. Thank you for this post MM.

    I was surprised that my CC company increased my credit limit without informing me first. I got to know about it after the fact. I gave them a piece of my mind because they’re actually increasing the risk of liability in cases of card loss or theft.

    Also, I have to say kudos to Travel Club. They really ask for identification and compare signatures when paying for a credit card. Same goes for certain Robinsons Supermarket branches. I can’t say the same for other establishments though.

  60. Many have relied on the credit card as pangtawid sa gastusin when the sweldo runs short already. The common mistake made is just sticking to pay the minimum balance and not having a payment plan in mind. There was a time when I made up my mind to clean my credit card debts so I made a schedule of payments and made estimates on the interest I need to pay.. funny how everything seems to be clearer when everything is laid down in a spreadsheet… when I saw how much interest I need to pay just to settle my credit card debt alone, it just strengthened my resolve to clean it up.

    I also hate the tactics being used by collection agents… it’s very degrading the way they treat people who have not been able to pay their credit cards.

    I always tell my friends.. walang nakukulong sa utang… just don’t issue post dated checks and not fund it.. otherwise BP 22 ang kaso mo… :)

  61. “To me, this is a stunning piece of data. Roughly 3 million cards carry an average of PHP44,776 in revolving balances.”

    This is why, at all costs, I pay off my monthly credit card bill in full. That’s a habit I’ve picked up from my mom, so I’m lucky that way.

  62. The use of credit cards in the Philippines is actually quite low due to the lack of infrastructure and the low level of personal income/savings. But the increase of credit cards wouldn’t worry me too much because it’s the same bad debts from traditional lenders transferred to a more professional and organized institution. We need to manage all kinds of debt and credit cards may pose a certain level of temptation for younger people. That’s why I use my debit card more, because I just need a way to carry less cash and get some rewards, I never used my cards as a way to extend my finances.

    Working for barely two years I go by some of the most important rules in spending your income, I keep 50% as best as I can. And the harder bit, all my expenses for the entire month should and need to be covered by the other 50%. Living beyond your means is one sure way to the poorhouse, the only situation where I think getting a short-term loan is justified is concerning health emergencies–but staying healthy and living responsibly (together with your family) will also decrease the chances of such situations from happening.

    If you have some debts though try to tackle them one at a time so as not to get overwhelmed. I told a friend to tell his friend (haha) to get rid of her debts and cards one by one. Citibank charges the worst so it should be the one to go first, I don’t know how many times I’ve declined on that one.

  63. MM, may I link this article on my facebook page? This is such an informative piece and people really ought to take time to read this. This is especially poignant for me as a few years back I was literally buried underneath massive CC debt. Had I known these things then I wouldn’t have been so cavalier about CC’s.

  64. Wow! Very informative post. I always knew that local credit card issuers charge exorbitant rates on unpaid balances. I was a bit surprised that less than 5% of the country’s population maintain a credit card.

    From my own credit card experiences, I wrote a blog post on managing the credit card. So for those who want to escape from credit trap, follow the link below.

    MM: If my link will spoil your credit card education series, feel free to delete the second paragraph onwards. Regards – Noel

  65. Let me join the chorus of the grateful, MarketMan. I’ve only begun to swim the shark-infested waters of responsible adulthood (God help me) and credit cards can seem awfully tempting sometimes. I know better than to want one, but they do come in handy for international transactions, booking flights and hotel rooms, etc.

    I have heard good things about HSBC in particular, so I wonder if you’ll eventually confirm that or disprove it. Hehe.

    Thanks again and I’m looking forward to the next in this series!

  66. shiko, pay close attention to the posts when they get to my recent horrific experience with a credit card company… Noel, thanks for that link. Angelo, absolutely go ahead and like this on your facebook. I have also allowed re-publication in full on the “Pro-Pinoy” website, and I think the hits on this post alone are well over 50,000 page views by now and still rising as folks disseminate the information either by reposting or linking on their own facebooks, blogs and twitter accounts… Thanks everyone, I am just really swamped with work, hence the delays in the succeeding credit card posts…

  67. Thank you for this post MM!
    I’m one of those who immediately got a credit card after I got regularized in my first job. That was the first mistake I made. Then a series of mistakes followed from then on, as I squandered my salary thoughtlessly in my first few years as an employee using the credit card and I can only afford to pay part of the balance. The next few years and I had to acquire 2 other credit cards to pay for my balances in my 1st card. Then the balances and charges started piling up from all 3 of my credit cards and even if I’m getting a decent enough salary, it’s still not enough to settle all these debts. Suffice it to say that I wasn’t able to save anything from my first 6 years of working, really bad financial management on my part. I’ve learned from my mistake and now only keep 1 card, I literally cut the other 2 in half. What I did was got a bank loan and paid all 3 in full, so then it’ll be easier for me to pay just one debt and wouldn;t have to divide my payments into 3.

    People should be given ample education on credit cards so they’d know exactly what to expect and what they are getting theirselves into – I think CC Companies in partnership with banks/government financial institutions should even host these kinds of seminars! And I agree with you that relevant stats and data such as the ones you presented should be readily avaiable to aid the education of consumers so there trial and error experiences such as mine will be lessened (i hope) to a great degree.

  68. thanks for this!! i only keep one credit card based on lessons learned from three good friends who couldn’t afford to pay their six figure debts, and this was the time we were only three years out of college and they were earning more than me! one friend maxed out all her five credit cards and would just pay minimum interest every month. while another used her credit cards to literally pay for everything: car repairs, insurance, mba school. and the other friend used it to pay for her family’s needs. the first two were bailed out by their parents who saw their bills and almost had a heart attack. and the other friend had to watch her money to pay off debt afterward.

  69. @Mm, I know but well it’s a loophole. Same tactic is applied even in gas station stores in the US. It was a topic of discussion I read in another forum. Most just conceded it to be a loophole.

  70. I received my statement from one of my Citibank credit cards. As per my cc statement, I was being charged P1,200 for my membership fee instead of P1,500. They had given me an automatic P300 annual fee discount. I wasn’t happy with the measly P300 discount as I always get the full annual fee reversed with all my credit cards.

    I called the Citibank hotline and requested the CSR to reverse the annual fee charges. The CSR told me CB instructed that reversal of annual fees will not be permitted this year. I asked to talk to his supervisor and he said that he is an officer and cannot grant my request.

    I asked the CSR if they had any offer I could avail of that would reverse my annual fee. He said if I availed of a cash loan, CB would reverse my annual fee charges. I told him that was ridiculous because I didn’t need money and I wasn’t stupid enough to avail of a loan with a predatory interest rate just to have P1,200 waived!

    I told him that I will just cancel my cc since I only use that particular card as a back up card and not my primary one. I refuse to pay P1,200 for a cc that I hardly use. This is the first time I’ve encountered a bank that refused to waive my annual fee. CB used to waive their annual fee but all of a sudden they refuse to do it this year.

    I am disappointed with CB’s new policy of refusing to waive their annual fees. CB should take into consideration their cardholder’s credit standing and payment history as the basis for whether or not to waive their annual fee. Makes me think that they refused to grant my request since they haven’t made money off me because I’ve never gotten cash from ATMs using my cc, availed of any of their high interest loans and balance transfers or revolved any balance.

  71. Hi, Mr. Marketman!

    Great article! I just want to ask, where did you get your credit card statistics? I’m currently making a comprehensive analysis of the Philippine credit card industry and it would really help if I could get a head start.

    Thank you and I’m hoping for your immediate reply!



  72. Gian, if you are doing a comprehensive study, then you need to do some primary and secondary research. There are several sources you need to tap into like the credit card association of the philippines, published central bank statistics, annual reports, etc.



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