Bangko Sentral Sets 2% per Month Cap on Credit Card Charges

The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, approved an annual interest rate cap at 24% per annum starting Nov. 3, 2020. This means that credit card companies are capped at charging up to 2% per month on unpaid outstanding credit card balances.

Benjamin E. Diokno, BSP Governor, said “The interest rate cap on credit card receivables aims to ease the financial burden of consumers and micro, small and medium enterprises amid a difficult economic environment caused by the COVID-19 pandemic,”

The BSP set a 1% limit for monthly add-on rates for credit card installment loans.

Additionally credit card companies cannot add extra charges on credit card cash advancements, other than a maximum processing fee of ₱200 per transaction.

Veronica B. Bayangos, BSP Director for Supervisory Policy and Research Department, said “Based on our data, average annualized interest rate for credit card receivables range from 18% to 58% from January to June 2020,”

Bayangos added “Based on the credit card business activity report, the average annualized interest rate for both premium and non-premium as of June 2020 was around 26%,”