Credit card charges up for review in January 

MANILA, Philippines — Credit card issuers are looking forward to a review of the cap imposed on credit card transactions, to be conducted by the Bangko Sentral ng Pilipinas (BSP) in January.

The Credit Card Association of the Philippines (CCAP) issued the statement after the BSP decided to maintain the interest rate cap and charges on credit card transactions until end-December before reviewing these again in January next year.

“CCAP acknowledges the BSP’s decision to maintain the current credit card interest rate ceiling. We trust and look forward to our regulatory body’s comprehensive review by January 2023. The review had always included the micro and macroeconomic factors relevant to the times, especially the rising policy rates as we end the year 2022,” it said in a statement.

With the appeal letter sent to the BSP in September, CCAP is optimistic that the regulator has considered the factors impacting the entire credit card industry.

“Throughout these pandemic years, the credit card industry has helped not only our members and everyone in the payment ecosystem, but also our fellow Filipinos. Even as we were faced with unprecedented challenges, we have equally risen above these hurdles and built even more strength through helping each other in the true Bayanihan spirit,” CCAP said.

It noted that with the pandemic spurring the rapid adoption of consumers of new virtual payment technologies, credit cards serve as an effective, safe and convenient payment tool that drives and contributes to the overall digitization goal of the country.

“With market-driven rates, it will help not only boost competition in the industry, but also help in financial inclusion – with everything helping our Filipino consumers as a bottom line,” CCAP said.

Consumers are expected to continue enjoying low interest rates and charges on their credit card transactions at least during the Christmas holidays after the central bank decided to maintain the current cap until the end of the year.

“No big reason. Just the timing of the cap adjustment,” BSP Governor Felipe Medalla earlier told The STAR.

Medalla, who chairs the seven-member Monetary Board, had said the regulator is finally adjusting the rate cap and other charges after a series of aggressive rate hikes delivered by the BSP to tame inflation and stabilize the peso.

The two percent per month and 24 percent per year interest rate or finance charge cap on unpaid credit card balance was imposed in Nov. 2020 to help ease the burden of Filipino consumers amid the COVID-19 pandemic.

Prior to the imposition of the cap during the height of the global health crisis, the annualized interest rate on credit card receivables averaged 36 percent.

Likewise, the monthly add-on rate that credit card issuers could charge on installment loans was maintained at a maximum rate of one percent as well as the maximum P200 per transaction processing fee on the availment of credit card cash advances.

The maximum rates and fees are subject to review by the BSP every six months and a new rate was supposed to be in place at the start of November.