Financial woes force Filipinos to cancel digital services
A Philippine survey on the financial impact of COVID-19 on consumers shows that 31% of Filipinos have cancelled or reduced digital services due to financial woes. This was among the budget changes reported by respondents, according to the Consumer Pulse study conducted by TransUnion. The research found that 93% of Filipinos surveyed have seen their household income negatively impacted by the COVID-19 pandemic.
“The survey did not specify the digital services. However, examples of wireless data, cable TV, and internet were provided in the survey, so at least one of these digital services has been cancelled or reduced by respondents,” TransUnion Philippines President and CEO Pia Arellano told Digital Life Asia.
Impact on household finances
The initial Philippine survey (conducted from March 5–22, 2021) of 865 adults in the Philippines and abroad marked the first by TransUnion in the country and is part of what is planned to be a series of ongoing research.
The breakdown of the 93% who said their household income was negatively affected is as follows: 65% of consumers who said their household income is currently being negatively impacted by the pandemic, and a further 28% who said it had been negatively impacted but not currently. Additionally, almost half (49%) of the respondents said they expected that their household income will be negatively impacted by the pandemic in the future.
Among the respondents whose household income is currently negatively impacted, 45% said they or someone in their household had lost their job, 42% said they or someone in their household had had their work hours reduced, and 24% said someone in their household owned a small business that closed or had orders that dried up. As a result, it has become even more challenging to manage household budgets.
Of those whose income is currently negatively impacted, 88% said they are concerned about their ability to pay their current bills and loans in full, with 48% reporting they will not be able to pay their bills in less than four weeks. Among those whose household income is currently decreased and has these bills and loans, 47% said they would be unable to pay their mortgage, 41% auto lease, 36% house/rental insurance, and 35% credit card.
Apart from canceling or reducing digital services, what are the other budget changes that Filipinos have been forced to make because of these financial woes? Almost half (47%) reported they had cut back on discretionary spending. Meanwhile, 48% said they had saved more in emergency funds; 26% had paid down their debt faster; and 19% had saved more for retirement.
“Yes, they are a basic necessity. However as per the survey results we found that 18% of respondents will be unable to pay their internet bills and that 11% have their internet bills enrolled in financial accommodation services. This means that in spite of it being a basic necessity, respondents are still having difficulty in paying their internet bills,” Arellano said.
In response to these financial woes caused by COVID-19, Filipino consumers surveyed cited several ways they plan to address their obligations.
Savings and loans
Forty-nine percent of those who reported their household income currently negatively impacted said they planned to use their savings to pay current bills, and 44% said they would borrow money from a friend or family member.
Meanwhile, 45% said they would pay a partial amount, and 17% plan to take out a personal loan to pay their current bills or loans. For context, nearly one-third (31%) of Filipinos are in the medium risk credit range (those who say their credit score is 750–789 – i.e. EE-FF), and nearly a third (31%) do not know their credit score.
“Whether it’s their financial health, financial wellbeing, or changes in day-to-day living, the lives of millions of people in the Philippines and abroad have changed dramatically because of COVID-19. The Philippines, like many other countries, has had extended periods under lockdown, and we continue to manage the ongoing impact as the number of cases remains high. The aim of our regular Consumer Pulse research is to better understand the financial impacts of the pandemic and better inform consumers, businesses, and government decisions during these unprecedented times,” Arellano said.