Credit card rate hike welcomed

THE Credit Card Association of the Philippines (CCAP) welcomed the government’s decision to raise the monthly interest rate ceiling on credit cards to 3 percent from the 2 percent starting next month.

The Monetary Board (MB), the policymaking body of the Bangko Sentral ng Pilipinas (BSP), issued Resolution 55 last January 13 raising the maximum interest rate or finance charge imposed on a cardholder’s unpaid outstanding credit card balance by 100 basis points to 3 percent from 2 percent per month or 36 percent per annum.

“The umbrella organization of 17 credit card issuers continues to support the BSP’s mandate of maintaining monetary stability and the overall soundness of the Philippine financial system,” the CCAP said in a statement on Monday.

“It believes the recent MB decision to ease the monthly interest rate cap on credit cards is part of the BSP’s calibrated responses to the present economic situation,” it added.

According to the BSP, the existing ceiling on the monthly add-on rate that credit card issuers can charge on installment loans is maintained at a maximum rate of 1 percent. Additionally, the central bank said that the maximum processing fee on the availment of credit card cash advances remains at P200 per transaction.

“CCAP backs the BSP in pursuing various options using monetary tools to help many Filipinos, particularly the micro, small and medium enterprises, cope with rising consumer prices; boost consumption and tourism; and ultimately aid in the country’s economic recovery,” the organization said.

“With the pandemic spurring the rapid adoption of consumers of new virtual payment technologies, credit cards serve as an effective, safe and convenient payment tool that drives and contributes to the overall digitization goal of the country,” it added.

“Market-driven rates will help, not only in boosting competition in the industry, but in accelerating financial inclusion and creating a cashless society — which are aligned with the BSP’s goals,” CCAP continued.