Financial literacy is a must-have tool, especially for younger folks navigating today’s complex economy. In the Philippines, where more and more people are getting credit cards, knowing how to manage credit and use it wisely is more important than ever.

My own kids, Carl and Nia, really showed me how vital early financial education is for building a strong future. When Carl, my son, landed his first job in Makati back in 2015, credit card offers immediately started rolling in. At first, he was hesitant—a pretty common reaction given the debt traps out there. I knew I had to guide him, explaining that a credit card, used carefully, could be a valuable way to build a credit track record. This record, which grows as you show you can pay, is fundamental for future financial goals. My daughter, Nia, who’s four years younger, had the benefit of learning from Carl’s experience and our ongoing talks. This made her much more open to getting a credit card when her turn came. Both of them got their first credit cards through the banks where their salaries were deposited, which is a common and often convenient path since these banks often offer bundled financial products.

I constantly drilled into both of them the golden rule of credit card use: only spend what you can afford to pay off right away or when it’s due. It’s crucial to avoid making only minimum or partial payments, because that’s how compounding interest kicks in and rapidly inflates the cost of your purchases. And while those zero-interest promotions might look good, remember that merchants typically pay processing fees (anywhere from 1.75 percent to four percent), and those costs eventually get passed on to you, the consumer. Building a good credit track record isn’t just about steering clear of debt; it’s about establishing your financial credibility. This track record becomes incredibly valuable when big opportunities pop up, like securing a bank loan for a business venture. Banks, for example, might finance up to 90 percent of a promising project, especially if you have ample collateral, like real estate.

A recent experience with my wife perfectly illustrated this. When we bought a massage chair for our home in Silay, we were offered a five percent discount for paying cash. However, paying in 12 monthly installments with a credit card meant no discount. A quick mental check told me that by investing the equivalent cash elsewhere, I could snag an eight percent return, netting at least a three percent positive gain over 12 months, even after losing that five percent cash discount. The smart move was clear: use the credit card for the installments and invest the cash, effectively maximizing our financial position. This scenario really highlighted how understanding interest rates, investment returns, and credit card features leads to smarter financial choices.

The importance of managing your credit card goes beyond just personal finance. Credit card companies are part of a bigger network of credit bureaus that monitor and record financial behavior, distinguishing between good and bad credit management. In the Philippines, the Credit Information Corporation (CIC) plays a central role in this system. Created in 2008 through the Credit Information System Act (CISA), the CIC runs a centralized and comprehensive system for collecting and sharing credit information. In 2016, the CIC announced its first six accredited credit bureaus—a mix of international and local firms—tasked with operating within the Philippines.

The CIC, a government-owned and controlled corporation, gathers credit information from a wide range of sources, including banks, financial institutions, insurance companies, and even utility providers. This data allows creditors to accurately assess how creditworthy borrowers are. The system directly tackles the need for reliable credit data, significantly improving the availability and affordability of credit, especially for micro, small, and medium enterprises (MSMEs). It also helps reduce the need for collateral to secure loans and empowers financial institutions to lower overall credit risk, contributing to a more stable financial system. Most importantly, the CIC is mandated to provide credit information at minimal cost while protecting consumer rights and promoting fair competition.

Empowering the next generation with financial literacy is about more than just teaching them to save; it's about equipping them with the knowledge to strategically manage credit, make informed investment decisions, and understand the broader financial ecosystem. My children's journeys, though unique, underscore the critical role parents and educator