BSP retains 2% monthly credit card interest cap

The two percent monthly interest rate ceiling on credit card transactions has been maintained by the Bangko Sentral ng Pilipinas’ (BSP) policysetting Monetary Board (MB).

In a statement, the BSP said the MB decided to maintain the existing caps on credit card transactions under Circular No. 1098 dated September 24, 2020.

To recall, in September 2020, the MB set a 24 percent annual interest rate cap on all credit card transactions, equivalent to a monthly interest of two percent, in a bid to ease the financial burden amid the COVID-19 pandemic.

Under the policy, credit card issuers can only charge a maximum monthly add-on rate of one percent for credit card installment loans, and no other charges or fees can be imposed on cash advances except for a maximum processing of P200 per transaction.

The rates are subject to review by the BSP every six months. The caps were last retained in May this year.

As such, the central bank said the following credit card transaction interest rates and fee ceilings remain in effect unless revised by the BSP:

The maximum interest rate or finance charge on the unpaid outstanding credit card balance of a cardholder is two percent per month or 24 percent per year.

The maximum monthly add-on rate on credit card installment loans is one percent.

The maximum processing fee for the availment of credit card cash advances is P200 per transaction.

“The reasonableness of the ceilings shall be subject to further review in January 2023,” the BSP said.

“The BSP will continue to closely monitor evolving domestic and external developments that will impact the state of credit card financing, sustainability of credit card operations and viability of banks/credit card issuers,” it added.