Paying It Forward: When Cash is NOT King

Aneth Ng-Lim

Posted at Aug 20 2018 08:32 AM

In our country of some 106 million Filipinos, did you know less than 5 percent own credit cards?

Despite frantic marketing promotions from banks and other companies that issue credit cards, the Bangko Sentral ng Pilipinas 2017 Financial Inclusion survey reported only a 0.1 percent growth from 8.43 million active credit cards in 2016 to 8.44 million by 2017.

With consumers owning multiple credit cards, that means the actual number of cardholders is just a fraction of the 8.44 million. At that number, the usage of plastic money by Filipinos is significantly below compared to its neighbors in Asia, and shows that cash remains king in most of the 7,100 islands we call home.

Such a shame really because credit cards are not called fantastic plastic for nothing. Used responsibly, that rectangular piece of plastic can open many doors for the user, and not just the usual discounts, but also access to interest-free credit for at least 45 days. If you play your cards right, you can even make more money from spending!

Whether you already own one or two, or still thinking of getting one, here are some value-for-money reasons to keep one in your wallet.

1. Cash-free travel. With budget travel widely popular these days, a credit card can help you book that unbelievably low fare with a couple of clicks. And if your credit card offers free travel protection, you don’t need to shell extra for that with your reservation. When your passage is confirmed, go ahead and get a room, again with your plastic money. Online, you can choose to get a lower rate that is non-refundable, or a slightly higher rate that gives you the option to cancel at a later date, close to your travel schedule. All these done from the comforts of your home or office, sparing you traffic woes.

2. Gifts with every swipe. Credit card issuers all want that piece of action from your wallet so they keep offering instant gifts with a minimum spend. It seems everything from free movie passes to free roasted chicken has been dangled in front of credit card members to entice loyalty. Shop around for a card that offers the rewards you want for a lower spend requirement – say a free meal at a fast food chain near your office for every P2,000 you charge so you have a higher chance of redeeming the freebie. Make sure to note of promotion dates and what you need to redeem so you maximize the offer.

3. Rack up loyalty points. Nearly all cards offer loyalty points for every spend. If yours don’t, it could be because you have a low fee card with a lower monthly add on rate. But if yours do, again depending on your plastic, you could be earning points that you can exchange for different items, or miles at partner airlines, or cash rebates for certain purchases. This may be a good time to check if you are ‘earning’ what you want. If you like to travel, switch to a card that gives the most generous miles reward for your spend, with the airline you frequently use. Check too if your loyalty points, miles or rebates have an expiration date so they don’t go to waste.

4. Get your cake [rebates] and eat it too. You can enjoy additional perks with your credit card spending, not just from your issuer. Shopback.ph for example, rewards members with cashback rebates from their partner online stores and you don’t need to pay them a membership fee to join (I just hate it when I find out that others will charge you one after 3 months). From foodpanda to honestbee to Zalora to Photobook, earn back as high as 13% rebate on your spend. Every time your rebates hit P300, you can already withdraw and they can credit your nominated bank or PayPal account.

5. Say goodbye to annual fees. Card annual fees can go as high as P12,500! This could stop you from applying for one but again use the industry competition in your favor and get a card that offers "free for life" annual fees. These offers normally come with a required annual spend but some of them are reasonable. If they want you to charge at least P120,000 a year – consider if this amount will cover your groceries, gas and other essentials. If your answer is yes, go for it.

One thing to remember, credit cards are just that – cards that extend you credit. Don’t think that because you make P25,000 a month and your credit card gave you a spend limit of P50,000 that you can spend P75,000! That plastic is not your supplemental income so swipe it wisely.

Disclaimer: The views in this blog are those of the blogger and do not necessarily reflect the views of ABS-CBN Corp.