Senators cite need to protect consumers from high interest rates

MANILA, Philippines - A number of senators have cited the need to protect consumers from what could be deemed excessive and sometimes hidden fees and charges imposed by banks on credit card holders.

Senators Cynthia Villar, Francis Escudero and Miriam Defensor Santiago filed separate bills that would not only ensure transparency but also impose a ceiling on interest rates charged by the banks and other financial institutions on their credit cards.

Senate bill 315 filed by Villar calls for the imposition of a ceiling on interest rates for purchases and cash advances at one percent a month or 12 percent per annum, without compounding.

The same would also apply for surcharges and penalties.

“People all over the world have their own horror stories to tell in the matter of credit card hidden charges and the never-ending payments they seem to be making, which have more often than not, exceeded the principal amount that they have obtained as a loan in the first place,” Villar said in her bill.

“In most countries, by law, hidden fees are not allowed to be imposed on the customers, they must be reflected clearly in every billing statement received by the individual to ensure the payments in excess of what is actually due him is avoided,” she added.

Santiago, in her Senate Bill 384, called for the regulation of the issuance of credit cards to young adults, particularly students, so as to prevent the credit card companies from taking unfair advantage of them and their parents as well.

Based on the bill, unless a parent, legal guardian or spouse of a college student assumes joint liability for debts incurred by the student using his credit card, no creditor shall grant a college student a credit card account where the credit liit exceeds 20 percent of the annual gross income of the student or P15,000.

Parental approval would also be required for any request to increase credit lines for the card of the college student.

“The issue of credit card debt is one that affects many Filipinos. More young people are getting themselves into situations where they find themselves unable to meet their unsecured credit commitment. A major issue with credit cards is that it is very easy to spend beyond one’s means,” Santiago said.

Senate Bill 602, filed by Sen. Escudero, on the other hand, covers both the concerns raised by Villar and Santiago.

Dubbed as the proposed credit card and other access device act, Escudero’s bill also pushes for the same ceiling on interest rates, penalties and surcharges as Villar’s.

The provision on student credit card protection under Escudero’s bill also almost the same as that of Santiago’s.

Escudero’s bill also has a provision on privacy and fraud to protect credit card holders.

Another bill filed by Villar, Senate Bill 315 or the proposed credit card fraud act, contains the same provisions as that of Escudero’s.

Both bills specify the acts considered as fraud in relation to credit cards such as the use of a scanning receiver and hardware or software used for altering or modifying telecommunications instruments to obtain unauthorized access.