The Monetary Council of Bangko Sentral ng Pilipinas has maintained the annual interest rate cap of 24% on all credit card transactions, the central bank said on Friday.
In a statement, the BSP said that “the maximum interest rate or finance charge on a cardholder’s outstanding credit card balance remains at 2% per month or 24% per year.”
Credit card interest rate ceilings comply with BSP Circular No.1098 of September 24, 2020.
The central bank also said that the additional monthly rates that credit card issuers can charge on installment loans are kept at a maximum rate of 1%.
The maximum processing fee on the availability of credit card cash advances remains at P200.00 per transaction, he said.
“The Monetary Board’s decision is based on an overall assessment taking into account developments in the macroeconomics, 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 on consumers through affordable prices for credit cards, ”BSP Governor Benjamin Diokno said.
Maintaining the current cap is in line with the current low interest rate environment, according to the central bank.
At its recent policy meeting, the Monetary Council kept the overnight repo facility at 2%, the lowest policy rate since the start of the pandemic.
BSP said data shows credit card business activity improved in 2021, as evidenced by growth in monthly card applications, card billings and cards issued, supported by an increase in l ‘economic activity.
He said the number of monthly card requests increased significantly by 175.1% year-on-year in June 2021 to around 646,000 requests compared to 235,000 requests in June 2020.
Monthly card billing also increased 29.5% year-on-year in June 2021 to 73.0 billion pesos from 56.3 billion pesos a year earlier.
The number of issued and outstanding credit cards or in force credit cards also increased 8.7% to 10.2 million cards, from 9.4 million in the same period.
The BSP said the limits on credit card transactions remain in place unless they are revised.
The central bank has indicated that it will continue to closely monitor the impact of the caps on the state of credit card financing and the sustainability of credit card operations of banks and credit card issuers in the context of the evolution of the COVID-19 pandemic. —LBG, GMA News
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