Central bank keeps cap on credit card charges
THE central bank retained the ceilings for charges on credit card transactions to help consumers as the coronavirus disease 2019 (COVID-19) pandemic continues.
The Monetary Board kept the maximum interest rate on unpaid outstanding credit card balance at 2% per month or 24% per year, the Bangko Sentral ng Pilipinas (BSP) said in a statement on Tuesday.
The cap for the monthly add-on rate that credit card issuers can charge on installment loans was kept at 1%, while the maximum processing fee for credit card cash advances will remain at P200 per transaction.
“The decision of the Monetary Board will continue to help ease the financial burden of consumers through affordable credit card pricing amid the ongoing COVID-19 pandemic,” BSP Governor Benjamin E. Diokno said.
“It will also allow the BSP to assess the impact of the improvement in macroeconomic fundamentals and easing of mobility restrictions on the performance of the credit card industry,” Mr. Diokno added.
The ceilings on credit card transactions will remain in effect unless modified by the BSP.
“The BSP, however, will closely monitor evolving domestic and external developments that will impact the state of credit card financing, sustainability of credit card operations and viability of banks/credit card issuers,” the central bank said.
The BSP said recent data showed demand for credit cards weakened in the second half of 2021 as clients shifted to alternative digital products.
Still, issued and outstanding credit cards went up by 0.3% to 10.3 million, while monthly card billings rose by 33.9% year on year to P100.6 billion as of end-December 2021.
Credit card receivables grew by 4.9% year on year as of December 2021 amid easing of mobility restrictions and continued business activities.
Lenders were also able to keep the asset quality of their credit card portfolios healthy. The credit card industry’s non-performing loan (NPL) ratio was at 6.8% as of December 2021, lower than the 8.9% registered a year prior, with the NPL coverage ratio at 109.5%.
“Moving forward, the credit card industry intends to further reduce operating costs through digital transformation and process improvements as well as maintain prudent lending standards,” the central bank said. — K.B. Ta-asan
