BSP keeps cap on credit card finance charges
The Bangko Sentral ng Pilipinas (BSP) has decided to keep the current cap on finance charges that credit card issuers can collect from borrowers, but raised the fees for installment loans and cash advances.
In a statement, the BSP said the move was meant to protect consumers while providing credit card issuers more flexibility in setting charges as operating costs rise.
Circular No. 1242 dated Nov. 10 kept the 3-percent monthly cap on finance charges for credit card loans.
At the same time, the circular also raised the monthly add-on rate ceiling for credit card installment loans to 1.5 percent from 1 percent.
It has also increased the maximum one-time cash-advance processing fee to P300 per transaction from P200.
The BSP first introduced the ceilings in 2020—when the pandemic-induced recession battered households—and partially made adjustments in 2023.
The central bank regularly reviews the limits.
It takes into account overall economic conditions, the soundness of banks and other financial institutions, as well as the consistency with the BSP’s monetary policy settings, among other factors.
The adjusted ceilings will apply only to new transactions starting on the effectivity date of the new circular, which will enter into force 15 calendar days following its publication.
Meanwhile, credit card installment loans entered into before the effectivity date will remain subject to their agreed terms and conditions.
“All credit card fees and charges remain subject to existing consumer protection, disclosure and transparency requirements,” the BSP added.
Latest data showed credit card receivables grew 22.8 percent from a year earlier in September to P1.3 trillion.
That was the slowest pace of expansion in over four years, as high inflation and elevated borrowing costs tempered consumers’ appetite for loans.
In October, inflation jumped to a three-year high of 7.8 percent, driven by higher energy and food prices.
The BSP, meanwhile, has hiked its policy rate by 125 basis points since April. The latest increase—a jumbo half-point hike—brought the benchmark rate that guides bank lending costs to 5.5 percent.
BSP Governor Eli Remolona Jr. has said the central bank would raise rates as much as necessary to fight inflation, though he also stressed that further tightening would be less likely if the gap between the economy’s actual and potential growth would continue to widen.
