Cap on credit card charges takes effect

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BANGKO Sentral ng Pilipinas (BSP) Gov. Benjamin Diokno has reminded the public that the ceilings on interest rate, finance charges and fees on all credit card transactions have taken effect, Tuesday, Nov. 3, 2020.

“Starting on this date, interest or finance charges on unpaid outstanding credit card balance should not exceed 24 percent annually or two percent per month; the monthly add-on rate for credit card installment loans should not exceed one percent per month; and the processing fee on the availment of credit card cash advances should not exceed P200 per transaction, Diokno said.

In line with this, the BSP issued Frequently Asked Questions (FAQs) on the cap, which was approved under BSP Circular 1098 dated Sept. 24.

Aside from providing illustrative examples on the calculation of interest, finance charges and fees under Circular 1098, the FAQs also cited the rationale behind the initiative and the basis for the ceilings.

The policy initiative, which is pursuant to the BSP’s supervisory authority over credit card issuers under the Credit Card Industry Regulation Law, is seen to foster responsible credit card lending in the country.

Rates and fees provided under the circular are subject to review by the BSP every six months. Adjustments or changes, if any, on the ceilings will be carried out based on the said review. (PR)