Philippine Consumers Embrace Borrowing as Living Costs Climb

Borrowing Appetite Rises Despite Economic Headwinds

Filipino households are leaning more heavily into credit products, even as their outlook on personal finances deteriorates under persistent inflation pressure. TransUnion's latest annual survey shows the general population's Credit Perception Index climbed to 75 out of 100 in 2026, up from 73 the previous year and marking the highest reading since the study's 2023 inception. The shift reflects improved product familiarity, stronger confidence in lending offerings, and broader acceptance of borrowing as a financial tool.

Yet this growing comfort with credit arrives alongside a notable decline in near-term financial optimism. Just 64 percent of respondents expect their financial position to strengthen over the next quarter, down three percentage points from 2025, while 73 percent anticipate improvement over the coming year, also a three-point drop. Inflation, escalating living expenses, and energy costs dominate consumer concerns.

Peter Faulhaber, president and CEO of TransUnion Philippines, framed the divergence as complementary rather than contradictory during a media briefing. Consumers view credit not as a luxury but as a pragmatic response to tightening household budgets, he noted.

Emergency Spending Drives Credit Demand

Forty-three percent of survey participants said they plan to borrow or use credit for purchases in the months ahead, a five-percentage-point jump from the prior year. The data underscores a shift in borrowing motivation. Emergency expenses topped the list of reasons for taking on credit at 59 percent, followed by personal outlays at 50 percent and family-related costs at 45 percent. The pattern suggests credit is increasingly serving as a buffer for essential spending rather than discretionary consumption.

Faulhaber characterized the trend as evidence of maturing credit literacy. Filipinos are deploying borrowed funds for specific, need-based purposes, a departure from earlier patterns that leaned more toward non-essential purchases.

Alongside borrowing plans, 86 percent of respondents intend to increase savings, 73 percent aim to access more financial education resources, and 70 percent plan to explore new digital banking and fintech services.

Digital Banking Gains Ground, Traditional Banks Hold Trust Edge

Fintech adoption continues to deepen. Ninety-three percent of those surveyed use at least one fintech product, up from 91 percent in 2025. E-wallets remain the most widely adopted tool at 81 percent penetration, followed by digital banks at 52 percent and digital payment applications at 49 percent.

Despite the surge in digital finance usage, traditional banks still command the highest trust ratings among consumers. Eighty-eight percent of respondents view conventional banks as the safest financial service option, with digital banks close behind at 84 percent.

Transparency emerged as the single most important factor for building trust across all financial products. Fifty-six percent of respondents cited the absence of hidden fees as critical, while 53 percent pointed to fair interest rates and 52 percent emphasized robust security and fraud protection.

Unbanked Segment Lags in Credit Knowledge

The survey also highlights persistent gaps in credit understanding among unbanked Filipinos. The Credit Perception Index for this group fell two points to 65, while general credit knowledge dropped to 48 percent from 56 percent the year prior.

Financial literacy remains a barrier. One in four respondents reported difficulty locating educational materials on credit and financial products. Among those struggling to find resources, 60 percent said they couldn't identify trustworthy sources, and 44 percent found available information overly complex or poorly explained.

TransUnion and research firm Dynata conducted the 2026 survey between May 6 and May 26, polling 1,000 consumers across the Philippines.

Balancing Optimism and Caution

The data paints a picture of a consumer base adapting to economic strain by leaning more deliberately into credit infrastructure. While short-term financial confidence has softened, Filipinos are demonstrating greater sophistication in how they access and deploy borrowed funds. The challenge for lenders and policymakers will be ensuring that expanded credit access is matched by clearer financial education, particularly for populations outside the formal banking system.

As inflation continues to shape household decision-making, the appetite for credit appears likely to persist. Whether that appetite translates into sustainable financial health will depend on how effectively the industry can deliver transparent products and accessible guidance.