Bangko Sentral keeps credit card interest rate at maximum 2 pct per month

by ABS-CBN News, 26 Nov 2021

MANILA – The Bangko Sentral ng Pilipinas on Friday said it has maintained credit card transaction ceilings set last year, including the maximum interest for outstanding balance at 2 percent per month.

The retention is in line with the current low interest rate environment which was also kept at its lowest level of 2 percent, the BSP said in a statement.

The cap was earlier implemented in September under its Circular No. 1098.

“The maximum interest rate or finance charge on unpaid outstanding credit card balance of a cardholder remains at 2 percent per month or 24 percent per year,” the BSP said in a statement.

Monthly add-on rate that issuers can charge on installment loans was also kept at a maximum of 1 percent, the central bank said.

The maximum processing fee for the availment of credit card cash advances will also stay at the current rate of P200 per transaction, it said.

“The decision of the Monetary Board is based on a holistic assessment considering the developments in the macroeconomy, the state of credit card financing as well as the safety and soundness of banks and other credit card issuers. It will also continue to help ease financial burden of consumers through affordable credit card pricing,” BSP Governor Benjamin Diokno said.

The ceiling on credit card transactions will remain effective unless revised by the BSP, it said.

Diokno earlier said the surging credit card interest rate, which used to hit 40 percent, was “unacceptable.”

Data showed that credit card business activity improved in 2021, with growth in monthly card applications, card billings and issued cards driven by increased economic activity, the central bank said.

Card applications in June rose 175.1 percent to 646,000 from 235,000 last year, data showed.

The BSP said banks and credit card issuers are planning to offer more competitive products.