A lawmaker has filed legislation aimed at capping credit card interest and loan penalties to prevent Filipino borrowers from falling into "debt traps" caused by ballooning surcharges.

Representative Nathaniel Oducado of the 1Tahanan Party-list introduced House Bill 6980, also known as the Credit Cards and Loans Penalties and Surcharges Regulation Act. The measure seeks to establish uniform rules on the total cost of credit, regardless of the loan amount or the type of lender.

The solon cited that while credit is essential for small businesses and households, many borrowers are currently overwhelmed by compounding charges that far exceed their original principal.

"As of early 2025, household and consumer loans reached P3.18 trillion, with credit card receivables exceeding P560 billion," Oducado said. He added that more than 60 percent of Filipino families currently struggle to balance daily expenses with debt payments.

The lawmaker pointed out that current Bangko Sentral ng Pilipinas safeguards apply only to loans of P10,000 or less. This leaves larger personal and business loans without comprehensive limits, allowing a P50,000 loan to potentially grow to P120,000 within two years due to interest and penalties.

Oducado said the bill aligns with Supreme Court rulings against unconscionable interest rates and mirrors consumer protection practices adopted in more than 70 countries.

"This bill is not anti-lending," Oducado said. "It is pro-fairness. It ensures transparency, protects borrowers from abusive charges, and supports small businesses and families so they can grow instead of being trapped in debt."

The proposed law would also strengthen disclosure requirements for banks and lending institutions, providing legal remedies for borrowers subjected to unfair charges as the lawmaker also urged his colleagues to pass the measure immediately to support equitable economic growth and protect consumers.