BSP Urged to Retain Existing Limit on Credit Card Charges in the Philippines
Makati City 2nd District Rep. Luis Campos Jr. has filed a resolution at the House of Representatives “strongly urging” the Bangko Sentral ng Pilipinas (BSP) to maintain the existing limits on credit card fees to help Filipino consumers get through with inflation that reached a four-year high of 6.9% in September.
Campos stated, “We want the BSP to keep credit card pricing reasonable and within reach of consumers that are now reeling from the soaring cost of goods and services.”
Campos noted that Filipinos are struggling to make ends meet and relying on credit cards for important purchases and paying bills, including their children’s tuition fees.
In House Resolution 459, Campos pushed the banking sector to maintain the 2% maximum monthly interest rate on unpaid outstanding credit card balances.
The resolution also encouraged BSP to preserve the maximum monthly 1% add-on rate on credit card installments and the ₱200 per transaction ceiling on cash advance processing fees.
The BSP is set to review the three thresholds next month. In addition, in three previous semi-annual reviews, BSP decided to retain the caps.
Campos cited, “The lifting of the ceilings would only aggravate the financial burden of consumers.”
According to BSP, as of June 30, 2022, more than 10.3 million Filipinos have been issued credit cards, and the banking system’s credit card receivables stood at ₱478.4 billion
Campos’ filed resolution wants the force and effect of the BSP Circular 1098 series of 2020 kept unchanged.
BSP Circular 1098 series of 2020 was issued during the COVID-19 pandemic when there were severe economic difficulties.
Before the implementation of the caps, interest rates of banks reached 42% annually (or 3.5% per month) on unpaid outstanding credit card balances.
The collection of banks in cash advance processing fees also reach ₱500 per transaction.
Campos reminded the BSP of the Consumer Act of 1992, or Republic Act 7394, which states “it is the policy of the State to protect the interest of the consumer, promote his general welfare, and to establish standards of conduct of business.”
Furthermore, Campos mentioned “Keeping the caps on credit card charges unchanged would discourage banks from unduly profiting from their credit card business and unjustly enriching their shareholders at the expense of consumers.”