BSP to public: Don’t fall into the debt trap

CEBU, Philippines — The Bangko Sentral ng Pilipinas (BSP) has advised the public to be responsible users of credit card to avoid from falling into the debt trap.

In an advisory, the central bank said that proper management of credit card helps consumers avoid debt traps and build a good credit history.

"Know the interest rates, fees, and other charges, to avoid surprises on your billing statement," the BSP said.

Just as the Christmas shopping season is starting, the BSP advised consumers to avoid unnecessary and impulsive purchases.

"Always check your billing statement. For any discrepancy, report to your credit card issuer immediately," the central bank noted.

The Bangko Sentral also told credit card users to pay the full amount of their debt on time to avoid late payment and interest charges.

"Set payment alerts if needed," it said.

They must also update personal information with their credit card issuer as this is used to contact them to verify transactions.

Users are also advised to destroy inactive credit cards, billing statements and related documents as information in these materials might be stolen and used in fraudulent transactions.

The BSP also stressed that credit card owners must never share their account information with anyone.

"Deal only with 'trusted sites' when making online purchases. Report stolen cards immediately. Do not post financial information on your social media accounts," the central bank said.

While credit card usage in the Philippines is increasing due to the rising middle class, the country still lags Southeast Asia in terms of cashless transactions, even as majority of Filipinos prefer it because of safety and convenience, according to a recent VISA study.

In 2016, 9 percent of personal consumption expenditures were done through credit and debit cards, compared to 50 percent in Singapore and 30 percent in Malaysia and 16 percent in Thailand, the VISA study showed.

The results highlighted the challenges to financial inclusion in the Philippines as well as the slow internet connections.

VISA country manager for the Philippines and Guam Stuart Tomlinson had said the low bank population affects the low population of electronic payments too.

The study also showed that 6 in every 10 Filipinos prefer using electronic payments as they think having cards is safer and more convenient than bringing cash.

According to the Bangko Sentral's 2016 Financial Inclusion Initiatives report, 63.8 percent of cities and municipalities in the country have banking presence.

The banking industry is investing into contactless payments and is convincing more retailers to install technology that would allow tap and go payment schemes. (FREEMAN)