THE increased use of credit is pointing to sustained financial strain on consumers, according to a study by TransUnion.
“In the face of sustained financial pressure, consumers in the Philippines have increasingly adjusted spending and saving behaviors. While more are shifting away from long-term savings, reliance on credit rose as almost one in five (17%) increased credit usage in Q4 during the holiday season,” TransUnion Principal of Research and Consulting for Asia Pacific Weihan Sun said in a statement on Tuesday.
TransUnion surveyed 938 adult consumers between Sept. 25 and Oct. 17.
A larger share of consumers is expecting rising bills and loan repayments (49%, up from 43% a year earlier) in the coming months, the study found.
In the fourth quarter, 42% of respondents cited difficulty paying bills and loans in full, little changed from 43% a year earlier.
“This consistent trend underscores sustained financial strain across many of the population,” TransUnion said.
Some 44% of respondents said their income grew in the past three months, while 40% said income was unchanged.
Some 80% of respondents said the higher cost of everyday goods is the most pressing concern affecting their household finances in the next six months.
This was followed by worries over job security (59%) and interest rates (41%).
“These findings underscored the caution of consumers regarding financial resilience — possibly suggesting broader implications for household spending and debt management in the coming year,” TransUnion said.
The study also found an increasing reliance on credit, with 64% calling access to credit highly important to achieving their financial goals — up from 58% last year.
Some 53% also said they were planning to apply for new credit facilities or refinancing existing credit in the next year.
“These behaviors reflect a tendency to prioritize immediate financial flexibility over long-term security as households attempt to bridge short-term financial needs in a high-cost environment. This might elevate default risks in certain debt categories which lenders should be cautious of. Additionally, these financial behaviors highlight the need for further credit education among a population where most consumers are relatively new to credit,” Mr. Sun said. — Aaron Michael C. Sy