Metro Manila (CNN Philippine, November 26) — The Bangko Sentral ng Pilipinas announced Friday it has retained ceilings on credit card transactions as borrowing rates remain low amid the COVID-19 pandemic.
In a statement, the BSP said the maximum interest rate or finance charge imposed on a cardholder’s outstanding balance remains at 2% monthly or 24% annually.
Monthly add-on rates that could be charged by credit card issuers on installment loans, meanwhile, were kept at a maximum 1% rate.
The Monetary Board also maintained the maximum ₱200 processing fee per transaction on the availment of credit card cash advances, added the central bank.
These credit card ceilings were stated under a circular issued in September last year, noted the BSP, adding these will be effective unless revised.
“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,” BSP Governor Benjamin Diokno said.
The move also aims to continue helping allay consumers’ financial burdens by means of “affordable” credit card pricing, he added.
The BSP also said this decision is in line with the low-interest rate environment at present, with the policy rate kept at an all-time 2% low since the surprise rate cut in November last year.
The central bank has since maintained an accommodative stance to further encourage borrowing and to give economic activity a boost. It earlier said it will be “patient” in adopting such a stance until recovery has become sustainable.
Credit card business activity has improved this year according to the BSP, citing the 175.1% spike in monthly card applications in June — with a total of 646,000 applications during the month.
Monthly card billings also rose to ₱73 billion, up 29.5% from the same month last year.
The BSP likewise reported 10.2 million in issued and outstanding credit cards or credit cards-in-force in June — an 8.7% annual increase.
“The BSP 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/credit card issuers against the backdrop of the evolving COVID-19 pandemic,” it said.
