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.

  • Billionaire finds wreck of WWII ship in Phl
    Billionaire finds wreck of WWII ship in Phl

    Microsoft co-founder Paul Allen says he has found the Japanese Navy’s biggest warship at the bottom of the sea in the Philippines, 70 years after US forces sank it. Allen posted a photo on Twitter on Tuesday of the World War II battleship Musashi’s rusty bow, which bore the Japanese empire’s Chrysanthemum seal. The American billionaire, who has also pursued space exploration, said his luxury yacht and exploration ship, the M/Y Octopus, found the Musashi one kilometer (1.6 miles) deep on the …

  • Miriam bucks house arrest for Enrile
    Miriam bucks house arrest for Enrile

    Sen. Miriam Defensor-Santiago believes granting Senate Minority Leader Juan Ponce Enrile house arrest, while former President Gloria Macapagal-Arroyo remains under hospital detention, will violate the equal protection clause of the Constitution. “That’s already a violation of the equal protection of the law,” she said. …

  • 8 of 10 cities most at risk from natural disasters located in Phl – study
    8 of 10 cities most at risk from natural disasters located in Phl – study

    Eight of 10 world cities most exposed to natural hazards are in the Philippines and more than half of the 100 cities most exposed to earthquakes, storms and other disasters are in four Asian nations, according to a research. The study, published on Wednesday by risk analysis firm Verisk Maplecroft, analyzed the threat posed by storms, floods, earthquakes, tsunamis, fires, volcanoes and landslides in more than 1,300 cities. The study found that the 10 cities most at risk are Port Vila in …

  • World's oldest person wonders about secret to longevity too
    World's oldest person wonders about secret to longevity too

    TOKYO (AP) — The world's oldest person says 117 years doesn't seem like such a long time. …

  • US ambassador recovers from knife attack praised by N. Korea
    US ambassador recovers from knife attack praised by N. Korea

    The US ambassador to South Korea, Mark Lippert, was recovering from surgery Thursday after having his face and arm slashed by a knife-wielding activist in an attack applauded by North Korean state media. The United States condemned the "act of violence" which saw the ambassador rushed to hospital where his condition was described as stable after two-and-a-half hours of surgery that included 80 stitches to a deep gash on his right cheek. During the assault, Kim screamed a slogan in favour of …

  • UNA hits PNP selection process
    UNA hits PNP selection process

    The United Nationalist Alliance (UNA) hit yesterday the apparent machinations in the selection of the new Philippine National Police (PNP) chief. Navotas Rep. Toby Tiangco, UNA interim president, said the administration and the ruling Liberal Party (LP) are perpetuating the bata-bata or patronage system in the selection process of the police chief. “They will start this by maneuvering the appointment of Gen. Garbo as PNP chief,” said Tiangco, referring to one of the top contenders for PNP …

  • Ohio mom, boyfriend guilty; child emailed teacher for help

    PORTSMOUTH, Ohio (AP) — A woman and her boyfriend pleaded guilty to raping her young children and were sentenced to prison on Wednesday, a year after one of her daughters emailed a teacher for help and said she and her siblings were being chained to their beds, deprived of food and sexually assaulted. …

  • New Moro rebel group emerges
    New Moro rebel group emerges

    A radical Muslim cleric trained in the Middle East and considered one of the leaders of the Bangsamoro Islamic Freedom Fighters (BIFF) has broken away from the terror group to form his own band of jihadists who are now reportedly providing sanctuary to bomb expert Basit Usman and at least five foreign militants, the military said yesterday. Armed Forces of the Philippines (AFP) spokesman Col. Restituto Padilla, citing reports from the field, said the Justice for Islamic Movement (JIM) was …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options