Credit card

Last year the Supreme Court limited credit card interest to a percent and penalty to another percent a month. (See http://sc.judiciary.gov.ph/jurisprudence/2009/september2009/175490.htm.) In writing last week about the little known ruling I may have opened a can of worms. Readers are complaining not only against rate overcharging but also other perceived abuses by card companies, and the Bangko Sentral-Monetary Board. Like:

Gerardo Concepcion: “Aside from charging 3.5 percent a month, my card issuer collects annual membership fee of P1,500, unjustified. Every billing, the amount I pay is applied first to the interest and the remains to the outstanding balance. Problem is, the bill states only the outstanding balance, thereby hiding the value of the interest. Example: my last bill was P58,000, excluding interest, but made to look like including it. What’s more, when I pay way ahead of deadline I get no discount, but if I’m late even for just a day the interest and penalty zooms sky high. Strangely too, the billing states that my payments are subject to acceptance by the card company.”

David Mercado: “Upon reading your column I perused my credit card billings, and realized that I had been penalized many times through no fault of mine. I received no billings before the due dates, only subsequent statements that included penalties and finance charges. I am requesting reversal of the charges.”

Atty. Sonny Pulgar: “The Credit Card Association of the Philippines is pulling your leg when it says that an SC decision is case-to-case. The Civil Code, Article 8, states: ‘Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system.’”

Artemio Tipon: “The CCAP said in your column that, ‘A bill of approximately P45,000 usually has an unpaid balance of P20,000; that’s only a 45 percent window for the issuing bank to make money.’ In my case, I had an unpaid balance of P9,863.50 as of July 19, 2010. I paid on August 7 P9,000, leaving a balance of P863.50. The statement for August 19, P4,032.55, included ‘interest charges’ of P502.46 for the unpaid balance of P863.50, or 58 percent for one month, iniquitous. I dutifully paid but complained, and was told that the P502.46 was ‘finance charge,’ contrary to the stated ‘interest charges.’ Finance and interest charges are different.”

Raul Borjal: “The CCAP complains, ‘The high level of write-offs means that responsible, disciplined card users are forced to subsidize the unchecked behavior of bad customers.’ But it’s the credit card companies themselves who are to blame for the state of things. You see them in the malls giving out application forms to just about anybody. Because of the card companies’ irresponsible marketing and credit-decision policies, the responsible card users get penalized.”

A BSP insider: “Peter Favila’s appointment to the Monetary Board violates the Bangko Sentral Charter. He is supposed to represent the private sector, but does not come from it. He came from the government, as Secretary of Trade and Industry. The next day, he was MB member — a midnight appointee of Gloria Arroyo.”

R. Manuel: “‘Case-to-case has a negative connotation: it’s the codeword for ‘corrupting the judges’.”

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Congress really should inquire into the card issuers’ overcharging and other alleged abuses. Senators and congressmen might want to find out why the Bangko Sentral, Monetary Board, and Department of Trade and Industry have chosen to defy or hide the Supreme Court decision.