Advice on wise credit card use and money management

The most important thing for a young man is to establish credit — a reputation and character. — John D. Rockefeller

How can young professionals, entrepreneurs, housewives and other people maximize the positive advantages of modern-day credit card convenience without falling victim to credit excesses and woes? What are the best strategies to manage money in these challenging times of global economic uncertainty?

Many Philippine STAR readers ask these questions, so this writer recently sought out the wise counsel and assessments of Claire Ann Yap, two-term president of the Credit Card Association of the Philippines (CCAP) and president of the country’s leading Metrobank Card Corporation (MCC), with over 900,000 in its cardholder base as well as the lowest delinquency rate in the Philippines.

One of the youngest corporate leaders in the banking industry, Yap has a 16-year-old daughter named Erin and her “son,” her Alaskan Husky dog named Shevvy. She is married to Ernie Yap, and they both share a passion for golf.

A joint venture of the Philippines’ biggest financial conglomerate Metrobank Group and the prestigious ANZ Bank of Australia and New Zealand, MCC has special tie-ups with leading firms such as the Lucerne jewelry and watch chain, Robinsons malls and Cebu Pacific Air through their Go! credit cards, Philippine Airlines, Singapore Airlines, and many others. Here are excerpts of our exclusive interview:

WILSON FLORES: How many credit cards are in use in the Philippines now out of a population of over 93 million people, and how does this number compare to those of other countries?

CLAIRE ANN YAP: There are over six million credit cards in the Philippines today. The number of credit cards vis-à-vis the total population is actually still very small compared to those of other countries, thus we have much room for growth.

What is your advice to people concerning wise credit card use and money management?

Live within your means. Buy or spend within your means. Please remember that credit history is very important to preserve.

How would you assess the state of the economy this year and next year?

I believe the economic situation in 2009 will be a bit challenging and it could extend to next year, so it pays to be financially conservative. However, we shouldn’t forget to be optimistic and resourceful, too, for in the Chinese language the expression for “crisis” is made up of two characters meaning both “danger” and “opportunity.” Look out for opportunities in these challenging times.

How do people avoid dangers in these uncertain times?

Be very careful in choosing where to invest your money. Avoid scams, especially if the promises and returns are too good to be true. Warren Buffett once warned about risk being not knowing what you’re getting into. It is still best to be conservative nowadays than to be sorry. My advice is to save. We have to encourage more savings because the Philippines has among Asia’s lowest national savings rates.

Has the global economic crunch affected credit card holders in the Philippines in general? How is the Metrobank credit card growing in these conditions?

The global crisis is affecting almost everyone, but we at Metrobank Credit Card Corp. are always conservative and prudent. We want to grow, but we grow intelligently. How is the crisis affecting consumers? People are cutting the use of their credit cards — before, if people used five or six credit cards, maybe now they only prefer to use three.

Can you explain your policy of growing intelligently as a company?

Like any enterprise, we want to be No. 1 in our industry and we want to be the biggest, but we believe that being No. 1 in size is less important than being No. 1 in service to our fast-growing clientele. Right now, Metrobank Credit Card Corp. ranks No. 3 in size, mainly because we’re the younger player, but we hope to become No. 1 in the next two years.

What are your plans for growing your business in these times?

We at Metrobank Credit Cards plan to bring more new cardholder advantages, values and more privileges as well as better convenience. For example, we’re looking at new technologies such as mobile technologies. Soon, our clients can pay their bills through the nationwide network of our partner, LBC, in addition to our extensive network of over 800 branches for Metrobank and 165 branches for affiliate Philippine Savings Bank (PS Bank). Our partners Visa and MasterCard are also world leaders.

We have read that you have such innovations as zero-interest installments for school tuition fees.

Yes, Metrobank credit card holders have the benefit of using their cards to avail of zero-interest installment plans for their school tuition fee expenses. Other benefits include installment plans for your travel expenses. We also have a Mabuhay Miles tie-up with Philippine Airlines, as well as partnerships with Singapore Airlines and Cathay Pacific.

What about shopping advantages?

Our most successful promotion so far is our Metrobank credit cards tie-up with Adidas, whereby customers get free Adidas products. This was so popular we had to extend it due to popular clamor. We also have a partnership with the Gokongwei family’s Robinsons malls and Cebu Pacific Air through the issuance of the Go! Mastercards.

One of your interesting billboards along EDSA that I remember is that of customers posing like the stars of the movie Titanic. Who won that promo?

You’d be surprised. The winner of the free cruise vacation in our Metrobank Cards Corp. raffles last year was boxing champion Manny Pacquiao.

What did he buy with his credit card to win that, and what type of card does he use, a platinum card?

Pacquiao won our raffle in 2008, a free cruise to Hawaii. No, he doesn’t use a platinum card; he is a low-key person so he uses a Metrobank gold card. It’s convenient because he travels a lot, so a credit card for a successful and busy person like him is so convenient and practical.

Do you encourage families to allow their children to own credit cards?

Yes, we believe parents or families giving their children credit cards while they’re young is good and actually practical. It teaches the youth about credit responsibility, it is training in discipline, it also helps a mother in shopping chores (laughs). Young people should early on already be given the task of helping in shopping and other chores for the family. We at Metrobank Credit Card Corp. do issue supplementary credit cards to young people who are at least 18 years old, but you can request to lower the credit limits for these cards.

When did credit cards start in the Philippines, and what changes have you observed in the usage behavior of our society ever since?

That is an interesting question. Credit cards were pioneered in the Philippines by the former Pacific Bank in the 1970s. Now there are 13 credit cards in our society. Before, people used credit cards only for special occasions or big purchases, but nowadays people use credit cards every day for ordinary transactions, from grocery shopping to gasoline expenses. Nowadays, people have accepted the idea that credit cards are for convenience, that there’s no need to keep paying with cash for everyday purchases and necessities.

Is it true that Metrobank Credit Cards has pioneered the concept of clients being able to totally redesign their cards?

It is not only useful for personal security when you can have your photo on your card, it is exciting because we at Metrobank Credit Cards allow you to express your individuality and artistic creativity. You can feature your face, family photo, favorite artwork or designs. This promo, called “Design My Card,” was launched by the company in the third quarter of last year. This is just one of the many innovations we have introduced to make Metrobank credit cards more exciting, convenient and unique for our clients.

Is it true that the credit card situation in the Philippines and much of East Asia, similar to our local banking industry, is stronger than that in much of crisis-hit USA?

We in the Philippines and in much of East Asia are comparatively more conservative than our counterparts in America. We should continue to be conservative, financially prudent, and to balance wise spending with savings.

Can you give us an example of one single big purchase that some of your top clients have bought using a Metrobank credit card?

(Laughs) We strictly maintain the confidentiality of all clients and their transactions, but one example I can mention was of a valued client using his Metrobank credit card to purchase a Toyota vehicle for P2 million. It wasn’t an installment plan but a one-time purchase. That’s what we mean by convenience: no need to bring cash, just your cards and, in the process, even win rewards points.

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