‘Credit card companies must inform clients of finance charges’

MANILA, Philippines – Republic Act 10870 or an Act Regulating the Credit Card Industry in the Philippines has lapsed into law after former president Benigno Aquino III failed to sign or veto it.

Under the new law, which became valid on July 17, credit card companies are required to inform their card holders and potential holders of the finance charges for unpaid amounts after the payment due date, percentage of interest to the total amount (in simple monthly or annual rates).

It also requires companies to disclose late payment fees, methods of determining the balance and interests or delinquency charges, and the renewal, processing, over-the-limit, collection, credit investigation and attorney’s fees.

Former Senate president Franklin Drilon and former House Speaker Feliciano Belmonte Jr. declared that the law aims to foster the development of the credit card industry and make it readily available to all Filipinos under fair and sound consumer credit practices.

It also aims to encourage competition and transparency to support more effective delivery of credit card services.

Section 9 of the Act requires the card company to inform their customers of the credit limit and changes to the credit limit, aside from giving the cardholder the choice to either decline or request for credit limit increases or adjustments.

The law also requires the credit card company to print in the billing statement that: “Paying less than the total amount due will increase the amount of interest you pay and the time it takes to repay your balance.”

It also allows the company to use third party collection agents but stresses that the cardholder should be informed and the agents must “observe good faith, reasonable conduct and proper decorum and refrain from engaging in unscrupulous acts.”

“A credit card issuer or collection agent shall not harass, abuse or oppress any person or engage in any unfair practices in connection with the collection of the debt,” Section 19 of the Act reads.

Violations to the law shall merit an imprisonment of two to 10 years or a fine of P50,000 to P200,000 or both.