The Bangko Sentral ng Pilipinas' policy-setting Monetary Board has maintained the 24% annual interest rate cap on all credit card transactions, the central bank said Friday.
In a statement, the BSP said “the maximum interest rate or finance charge on unpaid outstanding credit card balance of a cardholder remains at 2% per month or 24% per year.”
The credit card interest rates ceilings are pursuant under the BSP’s Circular No. 1098 dated September 24, 2020.
The central bank, likewise, said the monthly add-on rates that credit card issuers can charge on installment loans is retained at a maximum rate of 1%.
The maximum processing fee on the availment of credit card cash advances stays at P200.00 per transaction, it said.
“The decision of the Monetary Board is based on a holistic assessment considering the developments in the macroeconomy, the state of credit card financing as well as the safety and soundness of banks and other credit card issuers. It will also continue to help ease the financial burden of consumers through affordable credit card pricing,” said BSP Governor Benjamin Diokno.
The retention of the existing ceiling is in line with the current low-interest rate environment, according to the central bank.
In its recent policy meeting, the Monetary Board maintained the overnight reverse repurchase facility at 2%, the lowest policy rate since the beginning of the pandemic.
The BSP said that data show that credit card business activity improved in 2021 as demonstrated by the growth in monthly card applications, card billings and issued cards buoyed by an uptick in economic activity.
It said the number of monthly card applications significantly rose by 175.1% year-on-year in June 2021 to around 646,000 applications from 235,000 applications in June 2020.
Monthly card billings also grew by 29.5% year-on-year in June 2021 to P73.0 billion from P56.3 billion a year earlier.
The number of credit cards that were issued and outstanding or credit cards-in-force also increased 8.7% to 10.2 million cards from 9.4 million over the same period.
The BSP said the ceilings on credit card transactions remain effective unless revised.
The central bank noted it will continue to closely monitor the impact of the ceilings on the state of credit card financing and sustainability of credit card operations of banks and credit card issuers against the backdrop of the evolving COVID-19 pandemic. —LBG, GMA News