Connect with us

Hi, what are you looking for?


Higher cap on credit card charges to hurt consumers


RAISING the cap on credit card charges to account for rising interest rates will only benefit banks and hurt consumers, a lawmaker said in Tuesday.

“It’s just going to pad bank profits. Why we would want to adjust 24% per-annum interest rates upward, as if that’s not high enough, is beyond me,” Albay Rep. Jose Ma. Clemente S. Salceda, chairman of the House Committee on Ways and Means, said in a statement.

Mr. Salceda made the statement in response to reports that Bangko Sentral ng Pilipinas (BSP) Felipe M. Medalla said the central bank is reviewing the ceilings on credit card charges as interest rates continue to rise.

He said the net profits of the country’s biggest banks have increased by 12% to 72%, and raising the cap on credit card charges will only benefit them and hurt the middle class.

“I urge Governor Medalla and the Monetary Board to reconsider its efforts to review and possibly increase the rates,” he said.

Mr. Salceda said if the cap is raised, the annual rate will be among the highest in the southeast Asian region.

“In Thailand, the cap is 18% per annum. It’s 17.5% in Malaysia. It’s 28% in Singapore. And Indonesia has the same cap as we do,” Mr. Salceda said.

The BSP in November 2020 imposed a maximum interest rate on unpaid outstanding credit card balance of 2% per month or 24% per year to help consumers amid the coronavirus pandemic.

The cap for the monthly add-on rate that credit card issuers can charge on installment loans was also kept at 1%, while the maximum processing fee for credit card cash advances will remain at P200 per transaction.

These ceilings have been retained as of June this year. The BSP’s policy-setting Monetary Board reviews them every six months.

The BSP has hiked borrowing costs by a cumulative 225 basis points since May to fight rising inflation, bringing its policy rate to 4.25%.

Nicholas Antonio T. Mapa, ING Bank N.V. Manila senior economist, said consumer spending has remained robust despite high inflation due to low charges on credit card transactions. 

“If BSP adjusts the cap, then we could see a similar slowdown in purchases, and thus a similar slowdown in economic activity related to industries that cater to credit cards, which are essentially consumer goods and services,” Mr. Mapa said in an e-mail.

“With a higher price cap, we may see credit card loan growth soften as consumers may shift to cheaper digital alternatives such as e-wallets and online banking,” China Banking Corp. Chief Economist Domini S. Velasquez said in a separate e-mail. — Kyanna Angela Bulan

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!



BW FILE PHOTO LOCAL equities are expected to decline in December as investors are seen to pocket their gains from the market’s recent rally...

Editor’s Pick

Two new surveys have recorded sharp falls in business confidence as the uncertain economic outlook causes companies to become more pessimistic. The latest Lloyds...

Editor’s Pick

A small number of London-based derivatives traders at Goldman Sachs are to move to Milan in a further sign of the steady trickle of...

Editor’s Pick

EasyJet is to increase fares by more than 20 per cent and even higher at peak Christmas holiday times as the airline attempts to...

Editor’s Pick

The struggling discount chain Wilko has warned it could run out of money if it is unable to secure additional financing by the end...

Editor’s Pick

HSBC has announced that it will close 114 branches across the UK from next April as it blames the pandemic for a decline in...

You May Also Like


BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...


REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...


KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...


COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Disclaimer: Respect, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.