Credit card issuers urged to cut interest rates

Deputy Speaker and Surigao del Sur Rep. Johnny Pimentel has urged the nation’s credit card lenders to slash their interest rates to help Filipino consumers cope with the “unprecedented economic pain” caused by the COVID-19 pandemic.

“This is not just about pain-sharing. We are actually counting on reduced interest rates to encourage cardholders to increase their spending, which is crucial now to create the extra demand for goods and services needed to revive domestic industries and prevent more job losses,” Pimentel said.

Citing industry estimates, Pimentel said the country’s 10 million credit cardholders made some P1.2 trillion in aggregate purchases using their cards in 2019.

“Frankly, we find it somewhat excessive that card issuers up to now continue to charge borrowers monthly financing rates ranging from 3.0 to 3.5 percent,” Pimentel said.

“Temporarily deferred payments on card loans are not enough. Lenders should lower their interest rates, especially since regulators have driven down policy rates by almost one-third,” Pimentel pointed out.

To strongly spur lending to and borrowing by various sectors amid the crisis, the Bangko Sentral ng Pilipinas (BSP) cut its policy rate by 25 basis points on Feb. 6, 50 basis points on Mar. 19 and by another 50 basis points on Apr. 17, bringing the interest rate on its overnight reverse repurchase facility down to 2.75 percent per annum.

“We would urge the BSP’s Financial Consumer Protection Department to publish on its website a ‘before-and-after’ report on the interest rates charged by every bank for credit card, home, auto loans prior to and following the Monetary Board’s series of policy rate cuts,” Pimentel said.

Pimentel also previously challenged the largest retailers to follow in the footsteps of America’s Walmart Inc., which has recently hired some 200,000 temporary or part-time workers.

Leading supermarket and minimart chains should stay open for longer hours and enlist on a temporary or part-time basis furloughed employees from other industries battered by the pandemic, Pimentel said.