Interest rate on credit card transactions still capped at 2% per month
As the adoption of credit cards continued among Filipino consumers, the Monetary Board decided to keep the caps on interest rates and finance charges unchanged in order to ease the financial burden on users.
Under Circular No.1098 of Bangko Sentral ng Pilipinas (BSP) of September 24, 2020, the maximum interest rate or finance charges on a cardholder’s outstanding credit card balance is set at 2 % per month or 24% per year.
The monthly mark-up rate that credit card issuers can charge on installment loans has also been kept at a maximum rate of 1%.
In addition, the maximum processing fee on the use of credit card cash advances remains at P200 per transaction.
“The Monetary Council’s decision is based on an overall assessment taking into account developments in the macroeconomics, the state of credit card financing as well as the safety and soundness of banks and other credit card issuers,” BSP Governor Benjamin E. Diokno said. A declaration.
“It will also continue to help ease the financial burden on consumers through affordable prices for credit cards,” Diokno said.
Increase in applications
He added that maintaining the existing ceiling was in line with the current low interest rate environment.
At its last policy meeting, the Monetary Council kept the overnight repo facility at 2%, the lowest policy interest rate since the start of the pandemic in early 2020.
According to the BSP, the number of monthly card requests swelled 175% year-on-year in June 2021 to around 646,000 requests compared to 235,000 requests in the same month last year.
In the same comparative months, card billings jumped 29.5% year-on-year to 73 billion pesos from 56.3 billion pesos.
As of June, there were a total of 10.2 million credit cards, both valid and newly issued, an increase of 9% from 9.4 million cards in the same month of 2020.
The BSP also said credit card receivables contracted monthly in the first half of the year, albeit on a slowing trend.
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