A myth is defined as an idea that may be widely believed by the public, but isn’t necessarily true. Sadly, in the industries of finance and banking, some myths are more well-known and more commonly accepted than facts. That holds especially true for credit cards, which have something of a bad rap among ordinary Filipino consumers.
To an extent, ordinary Filipinos’ belief in these myths has a basis. Many consumers have true horror stories—either their own or from people they know—about credit card debt, fraud, and other payment card-related problems. In addition, movies, TV shows, and advertisements often portray credit card usage as exclusively for the rich. Hence, many Filipinos associate credit cards with luxurious purchases and extravagant shopping sprees—which are not everyday experiences for everyone.
The downside of such myths existing is that they obscure the truth about credit cards. In reality, a credit card can serve highly practical purposes and enhance everyday financial discipline instead of encouraging excessive spending. With the right mindset, your credit card will be less of a financial liability and more of a tool for your financial freedom. But you will need to learn how it actually works and how to use it wisely.
In this article, Robinsons Bank will be busting nine of the most prevalent credit card myths that many Filipinos still believe. These should separate the fact from the fiction and enlighten you on what’s truly possible with a new credit card of your own.
Myth #1: Credit Cards Are a One-Way Ticket to Financial Ruin
The first and most common credit card myth is that the little plastic card often leads to financial ruin. Some Filipinos believe that getting one will automatically transform their spending habits for the worse and lead to debt that takes years to repay.
Again, there is a grain of truth to this myth, and even you may know someone who’s had a scarring experience with credit card debt. But amidst signs of debt trouble, it’s better to ask the following questions: where is the debt coming from? What are the main drivers of credit card debt? What types of expenses and bad financial habits enable overspending and thus, undesirable financial situations?
Often, when you look closely at each person’s situation, the problem can’t be attributed solely to the credit card. The root causes of debt trouble may have more to do with lax attitudes on paying monthly dues or spending in excess for unnecessary items. It wouldn’t be right to blame everything on the usage of a credit card just by default. As such, this is the very first belief about credit cards that should be examined more closely in context.
Myth #2: Not Paying Off Your Credit Card Bills Could Land You in Jail
Another surprisingly common belief about credit cards is that unpaid credit card debt could land someone in jail. While not paying off your credit card bills will surely have a negative impact, it has more to do with future creditworthiness than a criminal record. Technically, unpaid credit card debt is classified as a civil liability and not a criminal liability. Your issuing bank cannot, for example, file incriminating information about your credit card debt to the National Bureau of Investigation (NBI).
Among offenses that may result in a “hit” on your NBI record, you can be assured that credit card debt isn’t one of them. Thus, you shouldn’t be discouraged from applying for a credit just for this reason.
Myth #3: Credit Cards Are a Hassle to Use Compared to Cash
The third myth is that paying for purchases via credit card is a hassle. Perhaps this myth is a consequence of older times, when cash was still the fastest, most convenient, and most reliable way to pay for the things people buy. But times are definitely different now, and many more merchants from both big conglomerates and the small business sector have embraced cashless payment systems.
Now it’s just as easy to make a cashless payment with a credit card than it is to bring out paper money and coins. In some cases, it’s even more desirable because it guarantees timely and accurate payment. Thanks to the robust cashless ecosystems of today, you can definitely consider this myth about credit cards as bust.
Myth #4: Credit Cards Are Difficult to Apply For
The fourth myth has to do with the application process for credit cards. Filipinos assume that if they want to apply for credit cards, they have to go through a long and arduous process. You yourself may think that you have to produce large piles of documents and wait a long time for approval. Just the thought of applying may turn you off for good.
But banks like Robinsons Bank have done their part in streamlining credit card application processes to just a few steps. For one, it’s now possible to apply for a Robinsons Bank credit card online. You can start the process without having to spend long hours at your branch. Staff at Robinsons Bank should also be upfront about what you need to bring, like proof of identity and proof of income. So if your bank has adapted the application process to the times and made it easier, a myth like this should no longer hold water.
Myth #5: If You Get a Credit Card, You’ll Be Stuck on the Same Terms Forever
The fifth myth pertains to credit card terms, like interest rates and the amount to pay for annual fees. Many Filipinos assume that signing up for a credit card means following the same terms forever. But terms for many credit card products may be negotiable, especially if you are a responsible credit card owner.
Down the line, it may be possible for the bank to waive your annual fee or for you to ask for a lower interest rate. You simply have to ask the bank staff who’ll be handling your application. It won’t hurt to see if you can get more favorable terms in the future so that it’s less expensive to maintain your credit card.
Myth #6: Credit Cards Are Only for the Moneyed Class
A sixth and highly prevalent myth is that credit cards can only be used by the moneyed class. After all, in media and pop culture, credit cards are synonymous with grand shopping sprees. It’s easy to make the assumption that only people who will have extravagant purchasing experiences will make good use of credit cards.
But in truth, credit cards shouldn’t be the exclusive domain of crazy rich Filipinos. A bank like Robinsons Bank offers products for thriftier, more practical, and more money-conscious consumers. You can choose a credit card that fits your personal needs and your lifestyle, even if it isn’t as glamorous as a celebrity’s.
Myth #7: Using a Credit Card Is No Different from Using a Debit Card
The seventh myth involves a comparison of credit cards and debit cards. They’re both plastic cards and they both allow cashless purchases. Merchants that accept credit cards for payment usually accept debit cards as well, as long as they use MasterCard or Visa for payment processing. Given their similarities, as well as the ease of applying for a debit card, many Filipinos assume that just a debit card is enough. After all, having a debit card is pretty much the same as having a credit card—or is it?
One disadvantage of having only a debit card is that you’re limited to spending only what’s in your bank account. This may not be ideal if you want to make a major purchase, but are unwilling to take a big chunk out of your account. Credit cards, on the other hand, can be used for buying essential appliances or electronics on an installment basis. With your credit card, you can spread out your payments for these into more manageable sums with a little interest on top. As long as you pay back your monthly dues to the bank, you can complete these purchases and enjoy a better quality of life with them.
Plus, credit cards often have more extensive rewards programs than debit cards. It’s possible to earn rewards points at your favorite shops, free airline miles, or gasoline rebates from your credit card. Why not take advantage of these when you sign up for one?
Myth #8: You Should Only Ever Have One Credit Card
Number 8 of the most common credit card myths is that you should only possess one in your lifetime. Granted, for most people, one credit card is enough. That means you only have one set of annual fees and one set of monthly credit card dues to worry about.
But that doesn’t mean that you should be limited to one credit card for the rest of your life, especially if you’ve built great financial discipline. Having multiple cards can help you curb overspending for one card, and you may be able to enjoy a greater variety of perks. Those who are more experienced with credit cards don’t have to stay limited to the same product forever and might want to explore other programs.
Myth #9: You Aren’t Ready to Apply for Your Own Credit Card
The last of these myths is one that you may believe about yourself personally: that you aren’t eligible for a credit card. But if you’re of a certain age, have a stable source of income, and can provide a billing address, you may be ready to apply. You don’t need to fit the stereotypical profile of a credit card owner, i.e. a high-income earner with lots of extra money to spend. You may be eligible for a credit card program that’s tailor-fit for first-time owners.
Browse the Robinsons Bank website and see if you fit the criteria for one of our credit card programs. If you are, you can apply for one at the nearest Robinsons Bank branch. The time may be ripe for you to explore financial options beyond what you have now. Don’t rule out ownership of a credit card as a mere fantasy for yourself until you know for sure!
Final Words: The Truth About Credit Cards Is More Than Meets the Eyes
In summary, a credit card can do much more for you than these nine myths may lead you to believe. It’s all about knowing what ownership of a credit card entails and how you can use it to be more financially responsible. Just like other things, it’s the truth about credit cards that will set you free!