New BSP circular on credit card transactions

MANILA, Philippines - On December 15, 2010, Circular No. 702, the latest regulation of the Bangko Sentral ng Pilipinas (BSP) on credit card transactions was promulgated. On December 22, 2010, BSP Circular No. 702 was published in one of the newspapers of general circulation. The effectivity of Circular 702 is January 6, 2011 which is fifteen (15) days following its publication.

It will be recalled that earlier, on September 25, 2010 to be exact, the first of a series of 7 articles on credit card transactions came out in this column. The title of the series of articles is "What credit cardholders should know about interests and penalties on credit card transactions."

These articles were written in the interest of public service. At that time, there were varied public opinions on whether or not credit card companies should reduce the rates of interest and penalties relating to credit card transactions. The varied public opinion was triggered by the decision of the Supreme Court in the much-publicized case of Ileana Dr. Macalinao vs Bank of the Philippine Islands, a case which deals on the rates of interest and penalty relating to credit card transactions.

The salient features of Circular No. 702 are as follows:

A. "Banks/Quasi-banks and their subsidiary or affiliate credit card companies shall not issue pre-approved credit cards.

"Before issuing credit cards, banks/quasi-banks and/or their subsidiary/affiliate credit card companies must exercise, x x x proper diligence by ascertaining that applicants possess good credit standing and are financially capable of fulfilling their credit commitments.

"The net take home pay of applicants who are employed, the net monthly receipts of those engaged in trade or business, or the net worth or cash flow inferred from deposits of those who are neither employed nor engaged in trade or business or the credit behavior exhibited by the applicant from his other existing credit cards, or other lifestyle indicators such as, but not limited to, club memberships, ownership and location of residence and motor vehicle ownership shall be determined and used as basis for setting credit limits. The gross monthly income may also be used provided reasonable deductions are estimated for income taxes, premium contributions, loan amortizations and other deductions.

"All credit card applications, specifically those solicited by third party representatives/agents, shall undergo a strict credit risk assessment process and the information stated thereon validated and verified by authorized personnel of the banks/quasi-banks and their subsidiary or affiliate credit card companies, other than those handling marketing."

B. "Banks/Quasi banks and their subsidiary or affiliate credit card companies shall also provide the following information to their cardholders:

"1. A table of the applicable fees, penalties and interest rates on credit card transactions, including the period covered by and the manner of and reason for the imposition of such penalties, fees and interests; fees and applicable conversion reference rates for third currency transactions, in plain sight and language, on materials for marketing credit cards, such as brochures, flyers, primers and advertising materials, on credit card application forms, and on credit card billing statements: Provided, That these disclosures are in addition to the full disclosure of the fees, charges and interest rates in the terms and conditions of the credit card agreement found elsewhere on the application form and billing statement; and "2. A reminder to the cardholder in the monthly billing statement, or its equivalent document, that payment of only the minimum amount due or any amount less than the total amount due for the billing cycle/period, would mean the imposition of interest and/or other charges:

"Provided, That such table of fees, penalties and interest rates and reminder shall be printed in plain language and in bold black letters against a light or white background, and using the minimum Arial 12 theme font and size or its equivalent in readability, and on the first page, if the applicable document has more than one page.

"Transitory provisions. Banks/Quasi banks and their subsidiary or affiliate credit card companies shall be given a period of 120 days from the date of the effectivity of this Circular to fully implement the required disclosure requirements."

C. "Banks/quasi-banks and their subsidiary/affiliate credit card companies shall inform their cardholders in writing of the endorsement of the collection of their account to a collection agency/agent, or the endorsement of their account from one collection agency/agent to another, at least seven (7) days prior to the actual endorsement. The notification shall include the full name of the collection agency and its contact details: Provided, That the required notification in writing shall be included in the terms and conditions of the credit card agreement. Banks/quasi-banks and the subsidiary/affiliate credit card companies shall adopt policies and procedures to ensure that personnel handling the collection accounts, whether these are in-house collectors, or third-party collection agents, shall disclose his/her full name/true identity to the cardholder."

All the foregoing provisions of BSP Circular No. 702 (suppletory to Circular No. 398 dated August 21, 2003 and Circular No. 454 dated September 24, 2004) are additional safeguards to protect the credit cardholders-users.

Have a joyful day!


Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Sandigan OKs hospital stay for GMA co-accused
    Sandigan OKs hospital stay for GMA co-accused

    The Sandiganbayan has allowed a government official, accused with plunder along with former President and now Pampanga Rep. Gloria Macapagal-Arroyo to undergo a medical procedure at a hospital tomorrow. The anti-graft court permitted former Philippine Charity Sweepstakes Office (PCSO) board member Benigno Aguas to undergo a cardiopulmonary/endocrine clearance at the St. Luke’s Medical Center in Quezon City. …

  • Appeal for convicted Pinay in Indonesia continues – Palace

    The Aquino government is doing everything possible to save a Filipina facing execution in Indonesia for drug smuggling, a Palace official said yesterday.Deputy presidential spokesperson Abigail Valte said the government was moving within Indonesia’s legal framework to spare Mary Jane Veloso from death.Foreign Affairs Secretary Albert del Rosario continues to exhaust all legal avenues to save Veloso from execution, Valte said.The Indonesian Supreme Court on Wednesday denied the government’s …

  • Sandigan recommends executive clemency for ex-envoy
    Sandigan recommends executive clemency for ex-envoy

    The Sandiganbayan has recommended executive clemency for a former Philippine ambassador to Nigeria who was sentenced to 52 years for malversation of public funds. The Sandiganbayan First Division found Masaranga Umpa guilty of misusing the Assistance-To-Nationals Stand-by Funds totaling $80,478.80 in 2007, but the anti-graft court said the former assemblyman from Lanao del Norte should be pardoned. …

  • Bulacan, Bataan are top Lenten destinations

    MALOLOS, Bulacan – With the expected Holy Week exodus of Catholic devotees to various pilgrimage sites in Bulacan, Bataan and other provinces near Metro Manila, local and provincial officials have coordinated with security and emergency response teams to address the influx of visitors.Among the pilgrimage sites in Bulacan that are often visited by travelers are the Divine Mercy Shrine in the town of Marilao; the procession of saints in Baliwag; the Banal na Bundok with the Stations of the Cross …

  • Stargazing at the mall highlights Earth Hour
    Stargazing at the mall highlights Earth Hour

    It was a night of stargazing in 58 SM Supermalls all over the country last night as these establishments participated in Earth Hour, an annual worldwide movement encouraging communities and establishments to switch off lights for one hour to raise global awareness of overuse of non-renewable resources. The Philippines has been an active participant of Earth Hour since 2008. Last night, in the province of Bulacan, for instance, all parishes, diocesan institutions, schools and household …

  • Payanig privatization hit
    Payanig privatization hit

    BLEMP Commercial of the Philippines, Inc. (BLEMP) denounced the recent announcement of the Presidential Commission on Good Government (PCGG) to privatize the 18.4-hectare “Payanig sa Pasig” property. In a statement sent to The STAR , BLEMP lawyer Dennis Manalo said the PCGG has no right to auction the property because it has no valid title and is not in possession. The PCGG has not paid a single centavo in real property taxes for the property, he said. He narrated that it was in the early …

  • New species of tarantula found
    New species of tarantula found

    Scientists from the Museum of Natural History (MNH) of the University of the Philippines-Los Baños have discovered a new species of cave-dwelling tarantula on an island off the coast of Quezon. The new species of the spider, Phlogiellus kwebaburdeos, was described in the recent issue of the Philippine Journal of Systematic Biology by MNH curators for spiders Aimee Lynn Dupo and Alberto Barrion along with their former student Joseph Rasalan. The tarantula was discovered by Rasalan during …

  • Palm Sunday: Do not add to suffering of others
    Palm Sunday: Do not add to suffering of others

    As Christendom enters Holy Week today, Palm Sunday, an official of the Catholic Bishops’ Conference of the Philippines (CBCP) yesterday called on the faithful not to add to the sufferings of their fellowmen. Jerome Secillano, executive secretary of the CBCP-Episcopal Commission on Public Affairs (ECPA), said that while Palm Sunday is oftentimes remembered as the glorious arrival of Jesus Christ in Jerusalem, it also signals the start of the Holy Week that tells of His suffering, death and …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options