The Bangko Sentral ng Pilipinas is maintaining the 2% ceiling for monthly finance charges on credit cards to ease the burden of debt payments for consumers.
In a statement Friday (November 26), the central bank said the annual interest rate on unpaid credit card balances will remain at 24% until further notice. It was first imposed in September 2020.
The monthly add-on rates for installment payment arrangements also remain at a maximum of 1%, while cash advance fees are capped at P200 per transaction.
“The decision of the Monetary Board is based on a holistic assessment considering the developments in the macroeconomy, the state of credit card financing as well as the safety and soundness of banks and other credit card issuers. It will also continue to help ease the financial burden of consumers through affordable credit card pricing,” BSP Governor Benjamin Diokno said, adding that the cheap borrowing cost matches the low interest rate benchmark set by BSP.
The retention of the existing ceiling is in line with the current low-interest rate environment. In its latest policy meeting, the Monetary Board maintained the overnight reverse repurchase facility at 2.0 percent, the lowest policy rate since the beginning of the pandemic.
The BSP added that the cheaper borrowing costs helped the credit card industry grow, with new applications nearly tripling as of June 2021 compared to a year ago.
Monthly card billings also went up 29.5% year-on-year to P73 billion as of June.
“Moving forward, banks and credit card issuers intend to offer more competitive credit card products, improve customer experience and reduce operating costs through digital transformation and process improvement,” Diokno said.