Billing Settlement Payment (BSP) holds a limit on credit card transactions

The Monetary Board has decided to maintain the existing caps on credit card transactions, according to Bangko Sentral ng Pilipinas (BSP).

The BSP said that this decision upholds the provisions set forth in Circular 1098 dated September 24, 2020. As such, the following caps remain in effect.

BSP said the “reasonableness” of credit ceilings would be reviewed again in January next year.

“Payment for Billing Settlement (BSP) will continue to closely monitor evolving domestic and external developments that will impact the state of credit card financing, the sustainability of credit card operations, and the capacity of banks/credit card issuers,” it added.

Publication 1098 states that the maximum interest rate or financing fee on a cardholder’s outstanding credit card balance is 2 percent per month or 24 percent annually.

It also states that the maximum monthly additional interest rate on credit card installment loans will be one percent.

The BSP also said that the maximum processing fee on making use of credit card cash advances is at P200 per transaction.

Earlier, Maria Magdalena V. Surtida, Senior Vice President, Asia United Bank Corp., said: And the head of Cards and Acquisitions, said that in light of rising interest rates, raising credit card rate caps is “always on the table.”

However, she said, the American University of Beirut cooperates with the BSP and trusts their judgment. Srtida said she regularly reviews macroeconomic indicators to support her decisions.

Srtida said AUB is bullish on credit card growth. She said the country has recovered from the pandemic and this increases credit card consumption.

Last month, the BSP said credit card payments in the country had increased by 20 percent as of July this year.

Credit card receivables began to see double-digit growth in 2022, Governor Felipe Medalla said, reaching 20.4 percent year-on-year in July 2022. He added that non-performing loan ratios fell to 5.7 percent over the period.

BSP Deputy Governor Chuchi G Funassier said the credit card industry has also been at the forefront of extending the central bank’s temporary relief measures to Filipinos during the pandemic.

Fonacier said that as of July 2022, the majority of restructured consumer loans were pesos 6 billion worth of credit card receivables, which accounted for 56.3 percent of the total over the period.

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