Finally, a cap on interest rates

Congress may not know it, but the Supreme Court in GR 175490, Ileana Macalinao vs. BPI promulgated on Sept. 19, through its Third Division with Associate Justice Presbitero Velasco Jr. as ponente, put a 2-percent cap on monthly interest rates by banks and credit institutions.

This means that when banks and credit institutions charge you beyond 2 percent a month, they are committing something illegal. You can now sue banks and credit card institutions if they charge you more than 2 percent.

This is relevant amid complaints from bank borrowers and credit card holders on the practice of these financial institutions of charging them as much as 42 percent annually, compounding everything, including penalties and interests.

This abuse, or rather ripoff, committed by banks and credit card institutions on the public came about when in 1982 then dictator President Marcos suspended the Anti-Usury Law that put a cap on borrowing at 12 percent per annum. I don’t know why Marcos did it but the result made it easy for banks and credit card institutions to abuse customers.

Would you believe that in the Philippines alone, credit card default has amounted to P30 billion out of P150 billion in total outstanding balance of cards? Santa Banana, there’s a clear and present danger to the banking and credit industry! –Emil Jurado, Manila Standard Today