Solons, please help credit cardholders

Will LTO chief Virginia Torres insist on Friday’s bidding for a new driver’s license supplier, against superiors’ orders? If so, she might be the second friend-appointee of President Noynoy Aquino to bring him shame.

The bidding is under fire for reverting to paper licenses from durable plastic cards. Torres reportedly is favoring the bidder that comes from her same religious denomination.

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I was swamped with reactions to my piece on overcharging by credit card companies (Gotcha, 20 Sept. 2010). Readers were stunned to learn that, while the Supreme Court deems “exorbitant, iniquitous, excessive” interest or penalty that is more than one percent a month, their card issuers impose so much more. Sadly the Bangko Sentral ng Pilipinas is ignoring the SC ruling (http://sc.judiciary.gov.ph/jurisprudence/2009/september2009/175490.htm). Here is a sampling of the e-mails; hopefully Congress will take up the cudgels for the consumers:

Ernie Manuel: “Even if I try not to, I use my credit card every time. While still paying the card issuer part of the total bill, I end up using the card anew, as my salary depletes. Aside from 3.5-percent monthly interest, there are also finance charges and penalties for not paying the full amount. We do not know our rights as cardholders. Who can instruct us?”

Tim Ramos: “So the SC has ruled: the allowable charge is no more than one-percent interest and one-percent penalty per month. While I am not on bad terms with my card issuer since able to pay on time, it charges me roughly 7-percent interest on the following month’s balance. How can we small clients make the bank charge only one-percent interest?”

Jojo A.: “It’s too bad: authorities are not circulating this info although credit-card debt ranks high among the middle class.”

Ari del Rosario: “I have been billed over P180,000 for purchases amounting to only P70,000. I had been remiss in payments owing to difficulties, but have overcome these. I gave P95,000 for a P70,000-debt, but the bank asked for P65,000 more. I ended up paying P180,000 in all. Can I recover my overpayment via a lawsuit?”

Enrique Clemente: “Their effective interest rate is actually much higher than 2-3 percent. Most card issuers charge a flat P500 on top of the interest. Worse is the basis of their charge. Like, if you have a bill of P1,000 due on Sept. 30 and you pay P999 on Sept. 28, your next bill will carry interest of P30 plus P500, or a whopping P530 on your P1-overdue. Yes, an interest plus penalty of 530 percent, which if annualized is 6,360 percent. Why? Because the basis of the charge is not the P1-overdue but the entire P 1,000. Even if you paid the P999 within the allowable credit term, you are still charged interest, penalty, etc. on the original bill. Why? Their argument is that they use the average daily balance. Yet, how can they invoke it when you paid before the due date? On a P1-overdue the interest should only be a few centavos. But card companies make a killing. It is the predator that sets the rules. Too, stores get away with adding the merchant fee to their customer’s bill.”

Manuel Cantos: “You must be referring to the SC ruling in Macalinao, GR No. 175490, dated 17 September 2009. I downloaded a copy from the SC website. Then I wrote the BSP Financial Consumer Affairs Group, asking for a copy of the opinion of BSP Assistant Governor-General Counsel Juan de Zuñiga — that the SC decision and benefit thereof applied only to the Macalinao case, to the exclusion of other cardholders in the same situation. I was told by FCAG that de Zuñiga’s opinion is the official BSP position, until and unless the SC rules again that the Macalinao case applies to all. The BSP took the side of the banks and card companies. This explains why neither the BSP nor the Monetary Board has enforced the SC ruling in Macalinao and earlier cases (Chua v. Timan, 2008; Imperial v. Jaucian, 2004).

Gerry Concepcion, Zamboanga City: “As a credit cardholder, I’m being overcharged 3.5-percent interest each monthly billing. This is a flagrant violation of the SC ruling that you cited. The BSP has been deaf-mute about it. Let us work together with all cardholders to end this highway robbery.

Ricardo Boncan: “Please give this issue wider coverage — for the sake of consumers who pay diligently but find credit card charges tighter and tighter to meet. In the US card issuers don’t even charge a yearly fee; here they do, plus 3 percent per annum. The US Congress already has enacted laws to regulate abuses by banks and card companies.”

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Card companies prey on the vulnerable. Who are these? Practically everybody who doesn’t own a card company. That is, the employee or entrepreneur who needs credit to survive, the spouse who manages the home budget, and the unemployed child who uses an extension card to run errands. Neither the BSP nor the Department of Trade and Industry are on their side. The two claim that, in spite of its generic phrasing, the SC ruling applies only to the Macalinao case. Perhaps the consumers’ last recourse is Congress. They can write their senators and congressmen for action. They can also band together in a class suit to have the SC ruling enforced by the government. –Jarius Bondoc (The Philippine Star)

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