Credit card interest rates cap sought

A lawmaker called Thursday for the passage of a proposed law that would put a cap on credit card interest rates and surcharges on both purchases and cash advances made by card holders.

TUCP Party-list Rep. Raymond Democrito Mendoza appealed for the passage of House Bill 7016, which he filed supposedly to prohibit credit card companies from charging fees for exceeding the cardholders’ credit limit.

“This bill will put into effect the cap on interest rates and penalty charges as ruled by the Supreme Court,” said Mendoza, the bill’s author.

Mendoza said there is a need to protect the consuming public using the convenience of credit cards. Credit cardholders suffer from exorbitant rates charged by credit card companies.

“Such fees are unconscionable since the credit card companies themselves authorized individual transactions which resulted in cardholders exceeding their credit limits,” Mendoza said.

Mendoza revealed that monthly rates range from 2.5 to 3.5 percent for cumulative non-compounded interest rates of 30 to 42 percent per year. With the penalty, late payment fees and other charges and compounding, the rate is more than what ‘5-6’ operators charge.

Under the measure, interest rates imposed by credit card companies on purchases and cash advances made through such facility shall in no case be higher than 1 percent per month or 12 percent per annum, without compounding.

The bill also provides that surcharges or penalties shall likewise be limited to a ceiling of 1 percent per month, without compounding.

It also prohibits imposition of charges on the cardholders for exceeding their credit limit regardless of conditions set by the credit card company.

The proposed measure, however, authorizes the imposition of attorney’s fees and collection cost on applicants for credit facility, provided the charges are completely disclosed to, understood, and consented by them. –GABRIEL S. MABUTAS, Manila Bulletin