House resolution presses BSP to keep 2% monthly cap on credit card interest rate

 

Makati City Rep. Luis Campos Jr. has filed a House resolution “strongly urging” the Bangko Sentral ng Pilipinas (BSP) to retain the existing limits on credit card charges to help Filipino consumers cope with rampant inflation that hit a four-year high of 6.9 percent in September 2022.

In House Resolution No. 459, Campos pressed the banking regulator to preserve the 2 percent maximum monthly interest rate on unpaid outstanding credit card balances.

“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 said in a statement on Thursday.

“Salaried Filipinos are struggling to make ends meet. They are increasingly relying on their credit cards to make essential purchases and to pay bills, including the tuition fees of their children,” Campos pointed out.

In his resolution, Campos also prodded the BSP to maintain the maximum 1 percent monthly add-on rate on credit card installment loans and the P200 per transaction ceiling on cash advance processing fees.

The BSP is set to review all three thresholds next month. In three prior semi-annual reviews, the banking regulator decided to keep the caps.

“The lifting of the ceilings would only aggravate the financial burden of consumers,” Campos warned.

More than 10.3 million Filipinos have been issued credit cards. The banking system’s credit card receivables stood at P478.4 billion as of June 30, 2022, according to the BSP.

Campos’ resolution basically wants the force and effect of BSP Circular No. 1098 series of 2020 kept unchanged.

The circular was issued two years ago, amid the severe economic difficulties, including job losses, caused by the COVID-19 pandemic.

Campos noted that prior to the imposition of the caps, banks charged interest rates of up to 42 percent per annum (or 3.5 percent per month) on unpaid outstanding credit card balances.

Banks also collected up to P500 per transaction in cash advance processing fees.

In his resolution, Campos invoked the mandate of the Consumer Act of 1992, or Republic Act No. 7394, which declares that: “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.”

“Keeping the caps on credit card charges unchanged would discourage banks, as enlightened creditors, from unduly profiting from their credit card business and unjustly enriching their shareholders at the expense of consumers,” Campos said.