Villar pushes bill protecting credit card holders

MANILA, Philippines - Las Piñas City Rep. Mark Villar has sought the immediate passage of a bill that seeks to protect credit card holders from excessive charges.

Villar authored House Bill 5201, which seeks to provide protection to credit card holders by setting a ceiling on interest rates and surcharges and prohibiting hidden penalties or costs imposed by banks and similar financial institutions.

“Credit card holders often find themselves shocked by the amount of their bill, not because of the actual purchases made but because of extremely high interest rates and hidden charges and penalties,” Villar said.

“These excessive interest rates and surcharges, more often than not, exceed the principal amount that the credit card holders obtained as a loan. If you don’t know how to protect yourself, you could end up paying hand over fist for fees hidden in your bills.

“This is also the reason why a lot of credit card holders remain in debt, even though they have already paid off more than the principal amount they actually borrowed. Clearly, this is unfair,” he added.

The lawmaker noted that the Philippines has a high interest rate compared to other countries. Since local banks do not require exhaustive and comprehensive data and information on the quality of their borrowers, they apply extremely high interest rates to protect themselves.

He also noted that interest is currently charged on a monthly basis on outstanding and unpaid amounts ranging from two to five percent per month, accumulating to 24 to 60 percent per year.

There is no cap or ceiling for credit card interest rates in the country.

Under the bill, interest rates on credit cards shall not exceed one percent per month or 12 percent per annum. The ceiling rate for surcharges and penalties shall be one percent per month.

The bill disallows compounding, or imposing an interest on the outstanding unpaid balance. The measure provides that no other charges shall be imposed.