The credit card delinquency rate is expected to further increase due to the loss of income and unforeseen expenses caused by the prolonged lockdowns to slow the spread of COVID-19, according to the Credit Card Association of the Philippines.
Delinquency level of credit cards is expected to continue deteriorating beyond 2020 until economic recovery is achieved and cardholders gain back their sources of livelihood.
The association said, “The factors that will contribute to the worsening of credit card delinquency rate include the higher default rate and contraction in receivables as a result of lower card usage volume.”
Data showed credit card delinquency rate surged to 11.5 percent as of end-September, over two and a half times the level at end-2019.
The dramatic increase in default rate was driven by the widespread loss of source of income of credit cardholders, a direct consequence of the slowdown in economic activities due to the pandemic.