How many credit cardholders are there?

There are some 7.4 million Filipinos who have credit cards, according to Euromonitor International, a global provider of business intelligence on industries, countries and consumers. Although this number is significantly lower than the total debit cardholders—31.3 million holders, or equivalent to 32.6 percent of the population—the country’s credit consumers have already grown by 32 percent from 2003 to 2008, Euromonitor International data show.

Bangko Sentral data reveals that credit card receivables of universal, commercial and thrift banks went up by 4.6 percent to P130.2 billion from January to September this year from P124.4 billion a year ago.

This means, more and more consumers are counting on to their credit cards instead of using cash to pay for goods or services.

The universal and commercial banks, which are the credit card issuers, aggressively promoted credit card use through promotional gimmicks. Their credit card receivables rose by 8.7 percent to P129.73 billion as of end-September 2009 against P119.31 billion in the same period in 2008.

With respect to the quality of credit card receivables, the central bank said nonperforming receivables soared to P16.64 billion in the first nine months of the year from P14.56 billion in the same period last year.

The pending Senate Bill 3534 aims to reduce the standard interest rate to 12 percent per annum. At present the issuers charge interest fees and charges of 38 percent to 42 percent.

“The current interest fees and penalties for late payment are unfair to the credit cardholders. Although they [credit card clients] are aware of the terms and conditions [which is in the fine print of the contract], they do not have the financial savvy that their respective debts could multiply up to 10 times the principal,” Teodoro Pastrana, a lawyer monitoring the credit card business with a view to helping cardholders from abuses, said.

There are instances, he said that credit card companies stop hounding a credit cardholder who has been delinquent. They wait until the amount has grown big enough to demand payment and haul the debtor to court.

“If you allow credit card firms to do this continuously, it is unfair [for the debtors] to suddenly realize that their obligations have swelled incredibly,” he said.

Thus, with cases like this, a debtor could invoke “latches,” since although the prescriptive period for debt collection is 10 years, one can challenge the creditor about why he allowed the obligation to stand for an unreasonable period of time, or near the period when they (the creditors) can exercise their maximum legal rights, the lawyer explained.

“This kind of strategy of the creditors should be likewise looked into,” he said. –KATRINA MENNEN A. VALDEZ REPORTER, Manila Times