The Monetary Board has set the limit on the annual interest rate on all credit card transactions at 24% effective November 3, 2020, the Bangko Sentral ng Pilipinas (BSP) announced Thursday.
In a virtual briefing, BSP Governor Benjamin Diokno said the policy also provides that interest rates or finance charges on the unpaid outstanding credit card balance should not exceed 2% per month.
"The interest rate cap on credit card receivables aims to ease the financial burden of consumers and micro, small, and medium enterprises amid a difficult economic environment caused by the COVID-19 pandemic," he said.
"Amid the rising use of electronic platforms for payments, the issuance will enable credit cardholders to settle financial transactions under more affordable pricing terms," he added.
The setting of a maximum ceiling on interest or finance charges on credit card transactions is also in keeping with the country’s current low interest rate environment, the BSP chief said.
Under the policy, credit card issuers may only charge monthly add-on rates of a maximum of 1% for credit card installment loans.
No other charges or fees may be imposed or collected on credit card cash advances, except for a maximum processing fee of P200 per transaction.
The rates will be subject to review by the BSP every six months, pursuant to the central bank's supervisory authority over all credit card issuers under the Credit Card Industry Regulation Law.
The new regulation also waives the requirement for credit card issuers to notify the cardholders of the said charges on interest or finance charges at least 90 calendar days before the changes take effect.
At present, the interest rate on the overnight reverse repurchase (RRP) facility remains at 2.25%.
The Monetary Board of the BSP is scheduled to meet again on next Thursday, October 1, to discuss whether or not a change in policy rates is warranted.—LDF, GMA News