BSP to impose 24pc cap on credit card interest
As of November 3, credit card issuers can charge a maximum of 2% per month on outstanding credit card balances.
The BSP (Bangko Sentral ng Pilipinas) will impose a new 24% cap on the interest rates that credit card issuers can charge borrowers, effective November 3.
“The interest rate cap on credit card receivables aims to ease the financial burden on consumers and micro, small and medium-sized businesses in a difficult economic environment caused by the Covid-19 pandemic,” said the governor of BSP Benjamin Diokno in a press release.
Currently, credit card users in the Philippines pay between 18% and 54% in finance charges, according to a central bank study.
Under the changes, credit card issuers can only charge up to 2% per month on outstanding credit card balances.
The new policy also imposes a separate interest rate cap on installment credit card loans, allowing only a maximum monthly premium rate of 1%.
Credit card issuers are also prohibited from charging additional fees on credit card cash advances except for the maximum processing fee of PHP 200 per transaction.
PASB’s circular on changes, which will be reviewed every six months, is available here.
Responding to the changes, BAP (Philippine Bankers Association) chief executive Benjamin Castillo said member banks recognize the importance of the reforms.
“We support this initiative. This will help ease the burden on every household, including businesses severely affected by the pandemic, ”he said.