Charge it – to experience!

What would life be without credit cards? For those of us who live from payday to payday (and often find out we have so much month left at the end of the money), we’d probably not be buying things we otherwise wouldn’t (and couldn’t) buy in cash. This is not to discredit credit cards, of course. For me, the almighty plastic comes in handy when I travel abroad or when I suddenly need to treat friends out (or need to splurge on an expensive dress to wear to a wedding). Go ahead, charge it – charge it to experience! A good friend makes sure she makes a sizable monthly donation to her bank by maxing out her credit card. Her credit card is bleeding her dry – if only she could be as generous donating to the Red Cross!

Recently, Bangko Sentral ng Pilipinas stopped the indiscriminate issuance of high-interest credit cards. The move was backed by Sen. Loren Legarda who said, "Banks and other lending institutions issue these credit cards like there’s no tomorrow. They entice people with supposedly low interest rates, but the truth of the matter is that interests on such loans are sky-high."

According to the senator, the entire banking sector generated about P47 billion worth of credit card receivables during the first quarter of the year. She pointed out, "Many Filipino credit card holders just do not have the money to pay incurred debts." And added, "It all boils down to fully explaining to people the finer points of credit card arrangements. For example, people are made to believe by issuers that they will pay only about 3.5 percent in monthly interest for the goods and services that they charge to a card. But the fact is, for so-called revolving borrowers, the yearly interest rate is really about 40 percent."

Legarda blamed the hidden charges and penalties that make it doubly harder for many credit card holders to pay their debts. Fact is, they end up paying just the "usurious" interest charges.

Director Ma. Teresa Arao-Mahiwo of the Bureau of Trade Regulation and Consumer Protection issued the following statements in response to a flood of inquiries received by the bureau:

As to the 5-6 percent surcharge in credit card sale transactions, surcharging of bank credit card sale transaction is not allowed and not consistent with the provision of the law.

The laws on price tags (Price Tag Law, as amended, and the provisions of the Consumer Act RA 7394 on price tags) direct that "all articles of commerce offered for sale at retail shall be sold uniformly and without discrimination to consumers, whether in cash or on credit." Whether the buyer pays in cash or with the use of a credit card, he should be charged the same price as indicated in the price tag.

The Department of Trade and Industry, through its regional and provincial offices, strictly enforces the Price Tag Law (RA 71, as amended) and the provisions of the Consumer Act (RA 7394 on price tags). Any store found to be violating such provisions will be administratively fined between P500 and P300,000.

Complaints of this nature can be lodged directly with DTI-NCR or the nearest DTI office in your area.

Re additional charges imposed on sale items bought through credit cards: The practice of giving discounts/bigger discounts to a group of buyers conditioned on payment in cash is neither prohibited by law nor contrary to public policy.

The storeowner is free to perform an act of liberality towards buyers whom he thinks deserve his generosity. On the other hand, buyers are free to exercise any of the two options available to them: 1) to pay in cash and get a discount; or 2) to use their credit cards but pay the regular price.

Consequently, the amount of the sale item purchased using a credit card should not be more than its regular price. If not, it is contrary to the provisions of the Consumer Act.

The storeowner shall make a disclosure or indicate in the price tag or anywhere within his premises, like a notice or sign visible to the customers, that the discount promo is available to cash buyers only. Otherwise, it shall be construed as an offer to both cash and credit customers.

It really pays to know your rights as a consumer. For more inquiries/complaints, call the DTI at 890-49-32, 890-49-43, 890-49-71 or 896-57-85; fax 890-49-49 or e-mail btrcp@dti.ph.