The Philippine economy is grinding to a halt, based on official government reports, which said the Gross Domestic Product (GDP), the total amount of goods and services the country produces, grew by a mere 0.4 percent during the first quarter of 2009.

Viewed from inside malls, supermarkets, or even public markets, however, it is difficult to imagine an economy drastically slowing down. True, many people have lost their jobs in factories that manufacture goods for the export markets. In most industries, however, people are still working, and many companies are still hiring.

The Philippine economy is mainly driven by consumption — people buying goods like household appliances, computers, personal apparel and homes, or services like wireless phone services. This is considered unreliable, fragile or temporary compared to manufacturing or exports, but consumption has proved to be a resilient driver for the economy for several years.

Consider some statistics. While GDP grew by only 0.4 percent during the first quarter of 2009, consumer loans increased by 18.7 percent during the same period. The Bangko Sentral ng Pilipinas attributed the growth to residential real estate loans and credit card loans, which funded consumption spending.

Consumer loans of universal and commercial banks and thrift banks reached P385.8 billion as of end-March 2009, up from P325.1 billion over the same period in 2008. Residential real estate loans accounted for the bulk or 41.6 percent of total consumer loans or P160.4 billion. Credit card receivables followed with a 27.7-percent share or P106.8 billion.

There’s a lot of growth potential for the credit card market, considering that at present, only four million people — less than 5 percent of the population — have credit cards. Credit card companies and credit card-issuing banks apparently realize this — their marketing people have become a permanent fixture in malls and other shopping centers, encouraging people to apply for credit cards.

Credit cards, also known as plastic money, offer a lot of convenience for most people. It eliminates the need to carry large amounts of cash, which invites criminal elements, or the hassle of issuing checks, which are not always accepted by retail establishments. Generally, credit card purchases entail no additional cost, as long as the bills are paid fully by the due date.

For many people, credit cards are a temptation — to spend — before the income that would later be used to pay for purchases, is earned. Because of the ease in making purchases through credit cards compared to taking out traditional loans, many people take on the attractive offers like interest-free installment packages, forgetting about the statement of account that will come at the mailbox after a few weeks.

While credit cards are now virtually for everybody (unlike in the past when credit card companies and banks conduct credit investigations on card applicants) people who buy whatever catches their eyes, regardless of whether they really need them, should not have credit cards. Personal discipline if credit cards are to serve the best interests of their holders.

Consumers should also realize that interest rates on the outstanding amounts from credit card purchases are much higher than ordinary bank loans — the range is 1.5 percent to 3.5 percent a month — that’s 18 to 42 percent a year! That would be usury, had the usury law not been repealed.

For those who have the discipline, and the patience to manage their personal finances, a credit card can become a useful possession, for personal security, for convenience and, of course, for easy, interest-free payment terms.