BSP warns against cap on credit card rates

MANILA – The Bangko Sentral ng Pilipinas (BSP) will not support a bill seeking to cap credit card interest rates, one of its officials said.

A BSP official, who spoke on condition of anonymity, said the legislative measure would only discourage banks from accelerating lending to consumers.

“This [cap on interest rates] might affect the performance of consumer lending,” the official said.

Sen. Francis Escudero, chair of the Senate committee on banks, was pushing for the passage of the bill called the “Credit Card and Other Access Device of 2009” which seeks to regulate interest rates and surcharges levied by credit card firms.

The bill proposes that interest rates imposed on credit card purchases and cash advances shall not be higher than 1% per month or 12% per annum.

The bill also seeks to impose a ceiling on the surcharges or penalties charged by credit card companies to 1% per month on unpaid debts, as well as prohibit compounding interest charges.

“When our people have no other recourse but to use their credit cards to pay tuition, buy essential goods, and even pay power and phone bills, then there is a need to protect them from volatility in the market, especially during these difficult times,” Escudero said in an earlier statement.

“Compounding the interests, surcharges and penalties of credit card debts is the main reason many of the credit card users are now neck-deep in debt. This is one way of helping them out of the debt trap,” Escudero added.

The bill has been approved in 2 Senate committees and is scheduled for deliberation in the plenary soon, according to Escudero. –abs-cbnNEWS.com