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BSP keeps credit card rate cap 

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Monetary authorities decided to keep current interest rate ceilings on credit card transactions, which was expected to further ease financial burden among consumers.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said such a move is “holistic assessment” amid current developments in the market and the local financial system.

“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,” Diokno said.

“It will also continue to help ease the financial burden of consumers through affordable credit card pricing,” he added.

Under Circular No. 1098, the interest rate on unpaid outstanding credit card balance of a cardholder will be capped at 2 percent per month or 24 percent per annum.

Likewise, monthly add-on rates that credit card issuers can charge on installment loans are likewise retained at a maximum rate of 1 percent.

The central bank also noted the maximum processing fee on the availment of credit card cash advances will be maintained at P200 per transaction.

According to the BSP, the retention of ceiling rates for credit card transactions was in line with the current low-interest rate environment–as key policy rates were maintained at 2 percent.

Better credit card numbers

Data from the BSP showed credit card business activity improved with monthly card applications soaring by 175.1 percent in June 2021 to around 646,000 applications from only 235,000 in the same month in 2020.

Monthly card billings also went up by 29.5 percent to P73 billion from just P56.3 billion in the same comparable period.

Further, the number of credit cards in October 2021 that were issued and outstanding or credit cards-in-force increased by 8.7 percent to 10.2 million from the recorded 9.4 million in October 2020.

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