November 26, 2022

According to Bangko Sentral ng Pilipinas (BSP), THE Monetary Board has decided to keep the existing caps on credit card transactions.

The BSP said this decision confirms the provisions of Circular 1098 dated September 24, 2020. Therefore, the following caps remain in effect.

The BSP said the “adequacy” of credit limits would be reviewed again in January next year.

“The BSP will continue to closely monitor evolving domestic and external developments that will impact the state of credit card financing, the sustainability of credit card operations and bank/credit card issuer profitability,” it said.

Circular 1098 provides that the maximum interest rate or financing charge on a cardholder’s unpaid outstanding credit card balance is 2 percent per month or 24 percent per year.

It also stipulates that the monthly credit rate for credit card installment loans will be a maximum of one percent.

The BSP also said the maximum processing fee for claiming credit card cash advances is P200 per transaction.

Earlier, Maria Magdalena V. Surtida, Asia United Bank Corp.’s senior vice president and head of cards and acquiring business group, said rising credit card rate caps are “always on the table” given higher interest rates.

However, she said the AUB had worked with the BSP and trusted their judgement. Surtida said it regularly reviews macroeconomic indicators to underpin its decisions.

Regarding credit card growth, Surtida said AUB is bullish. She said the country has recovered from the pandemic and this is driving credit card use.

Last month, BSP announced that the country’s credit card payments have increased by 20 percent since July this year.

Gov. Felipe M. Medalla said credit card receivables grew at double-digit rates in 2022, hitting 20.4 percent year-on-year in July 2022. He added that the non-performing loan ratio fell to 5.7 percent during the period.

BSP Deputy Governor Chuchi G. Fonacier said the credit card industry has also been at the forefront of expanding the central bank’s temporary relief efforts for Filipinos during the pandemic.

Fonacier said that as of July 2022, the majority of consumer loan restructurings were P6 billion in credit card receivables, accounting for 56.3 percent of the total during the period.