Banks vow compliance to cap on credit card charges

Christel Deskins

© Philstar.com/File Banks vow compliance to cap on credit card charges MANILA, Philippines — Banks have vowed to comply with the 24 percent cap on credit card charges to be imposed by the Bangko Sentral ng Pilipinas (BSP) starting Nov. 3 to help consumers and small enterprises amid the COVID-19 […]



a close up of a person using a tablet: Banks vow compliance to cap on credit card charges


© Philstar.com/File
Banks vow compliance to cap on credit card charges

MANILA, Philippines — Banks have vowed to comply with the 24 percent cap on credit card charges to be imposed by the Bangko Sentral ng Pilipinas (BSP) starting Nov. 3 to help consumers and small enterprises amid the COVID-19 pandemic.

Benjamin Castillo, managing director of the Bankers Association of the Philippines (BAP), said member banks recognize the importance of the credit card policy reform during this critically difficult period.

“We support this initiative. This will help ease the burden of every household including businesses severely affected by the pandemic,” Castillo said.

Latest data from the BSP showed the average annualized interest rate on credit card receivables range from 18 percent to as high as 58 percent in the first half of the year.

Credit card loans jumped 28.4 percent to P410.4 billion in the first semester from P319.64 billion in the same period last year.

BSP Governor Benjamin Diokno announced last Thursday the central bank’s Monetary Board approved the imposition of the ceiling on credit card charges to soften the blow of the global health crisis.

“The interest rate cap on credit card receivables aims to ease the financial burden of consumers and micro, small and medium enterprises amid a difficult economic environment caused by the COVID-19 pandemic,” Diokno said.

The BSP chief said the policy also provides that interest rates or finance charges on the unpaid outstanding credit card balance of a cardholder should not exceed two percent per month.

The new issuance prescribes a separate interest rate ceiling for credit card installment loans. For these transactions, credit card issuers may only charge monthly add-on rates up to a maximum of one percent.

Likewise, no other charge or fee could be imposed or collected on credit card cash advances except for a maximum processing fee of P200 per transaction.

The maximum rates and fees are subject to review by the BSP every six months.

Castillo said the BAP appreciates the continuing collaboration between the industry and the regulator to fight the ill effects of the COVID-19 health crisis.

According to the BAP, the BSP has been decisive and aggressive in its response to ensure a healthy and strong banking industry through policy rate and reserve requirement reductions.

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