THE CREDIT CARD Association of the Philippines (CCAP) welcomed the decision of the Bangko Sentral ng Pilipinas (BSP) to raise the monthly interest rate ceiling on credit card charges by 100 basis points (bps) to 3% from 2% previously.
“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.
“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,” it added.
The Monetary Board raised the ceiling rates for credit card charges last week to reflect the BSP’s policy tightening and to mitigate the impact of inflationary pressures on banks and credit card issuers.
Meanwhile, the existing ceiling on the monthly add-on rate that credit card issuers can charge on installment loans was kept at a maximum rate of 1%. The maximum processing fee on credit card cash advances was also maintained at P200 per transaction.
The cap on credit card transactions will remain in effect unless revised by the central bank.
The BSP said it will continue to monitor the domestic and external developments that may have an impact on consumers and the credit card industry, and the maximum processing fee and interest rates or finance charges would be reviewed every six months.
The central bank had kept the ceilings on credit card transactions at 2% for two years as a temporary relief measure to help ease the financial burden of consumers from the impact of the pandemic.
“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. — K.B. Ta-asan