BSP urged to withhold 2% interest on credit cards
October 8, 2022 | 00:00
MANILA, Philippines — A lawmaker has passed a resolution “strongly urging” the Bangko Sentral ng Pilipinas (BSP) to maintain the maximum interest rate of 2% per month on outstanding credit card balances to help Filipino consumers make in the face of soaring inflation.
Makati City Rep. Luis Campos Jr. tabled House Resolution 459 urging BSP to retain existing limits on credit card charges as the inflation rate hits a four-year high of 6.9% in September.
“We want the BSP to keep credit card prices reasonable and within reach of consumers who are now reeling from soaring prices for goods and services,” Campos said in a statement.
Inflation averaged 5.1% in the first nine months, after accelerating to 6.9% in September from 6.3% in August. It continues to remain above BSP’s 2-4% target range.
According to Campos, salaried Filipinos struggling to make ends meet “are increasingly relying on their credit cards to make essential purchases and pay bills, including their children’s school fees.”
The resolution urges BSP to maintain the maximum monthly rate of 1% on credit card installment loans and the cap of P200 per transaction on cash advance processing fees.
“Removing the caps would only add to the financial burden on consumers,” Campos warned.
The statement showed that more than 10.3 million Filipinos have received credit cards.
The legislator wants the “strength and effect” of the 2020 circular BSP 1098 series to remain unchanged.
The circular was issued two years ago, amid severe economic hardship, including job losses, caused by the pandemic. The ceiling is revised every six months.
Before the caps were imposed, banks were charging interest rates of up to 42% per annum, or 3.5% per month, on outstanding credit card balances.
Banks have also collected up to P500 per transaction in cash advance processing fees.
“Keeping caps on credit card fees unchanged would discourage banks, as informed creditors, from unfairly profiting from their credit card business and unfairly enriching their shareholders at the expense of consumers,” Campos said.