BSP keeps cap on credit card transactions

MANILA, Philippines — The Bangko Sentral ng Pilipinas announced its decision to keep the ceilings on credit card transactions amid its aggressive interest rate hikes to combat inflation. 

The central bank announced the decision in a statement on Tuesday, covering mainly the maximum interest rates with which banks could charge consumers on credit card transactions. 

This meant that finance charges on an unpaid credit card balance will stay at 2% monthly, equivalent to 24% per year. 

For Nicholas Antonio Mapa, senior economist at ING Bank in Manila, this move would facilitate consumer spending. Household spending kept the consumer-dependent Philippine economy surging in the third quarter despite expensive prices of consumer goods and services. 

“This decision will help bolster growth momentum by supporting consumption for the holiday season,” he said in a Viber message.

The announcement also covered the maximum monthly add-on rate on installment loans taken out with credit cards. This stays at 1%, according to the BSP. 

Lastly, the maximum processing fee that banks could charge on cash advances using credit cards will be kept at P200 per transaction.

The actions stayed in line with the BSP’s moves at the onset of the pandemic. In 2020, the central bank implemented this ceiling to protect consumers from exorbitant charges since many lost employment as result of the economy’s contraction. 

“However with growth proving resilient amidst surging inflation, BSP could have opted to adjust rates for this segment as early as now,” Mapa added.