BSP maintains a 2% monthly interest cap on credit cards
The 2% cap on monthly interest rates on credit card transactions was maintained by the Monetary Board (MB) responsible for setting the policy of the Bangko Sentral ng Pilipinas (BSP).
In a statement on Tuesday, the BSP said the MB has decided to maintain the existing caps on credit card transactions under Circular No. 1098 of September 24, 2020.
As a reminder, in September 2020, the MB set an annual interest rate cap of 24% on all credit card transactions, equivalent to 2% monthly interest, with the aim of easing the financial burden on the amid the COVID-19 pandemic.
Under the policy, credit card issuers can only charge a maximum monthly rate of 1% for credit card installment loans, and no other fees or charges can be imposed on cash advances, except for a maximum processing of P200 per transaction.
Tariffs are subject to review by the BSP every six months. The caps were last held in May this year.
As such, the central bank has stated that the following interest rates and fee caps for credit card transactions remain in effect unless revised by the BSP:
- The maximum interest rate or finance charge on a cardholder’s outstanding credit card balance of 2% per month or 24% per year
- The maximum monthly markup rate on credit card installment loans of 1%
- The maximum processing fee on the use of credit card cash advances of P200.00 per transaction.
“The reasonableness of the caps will be subject to further review in January 2023,” the BSP said.
“BSP will continue to closely monitor domestic and external developments that will impact the state of credit card funding, the sustainability of credit card operations, and the viability of banks/credit card issuers. “, he added. — Integrated news DVM, GMA