House Deputy Speaker Surigao del Sur Rep. Johnny Pimentel has cited the Bangko Sentral ng Pilipinas for slashing credit card interest rates by up to 43 percent effective Nov. 3 and described the move as “an early Christmas gift to consumers.”
The 43 percent cut in the interest rate on credit card loans will benefit over 10 million credit cardholders, the House leader said.
“We expect the big rate cut to drive the nation’s over 10 million credit cardholders to increase their purchases of goods and services, which in turn should help keep many industries afloat and avert further job losses,” Pimentel said after the BSP decided to impose a lower ceiling of 24 percent annum (two percent monthly) on the financing charges that banks may impose on all credit card balances that remain unpaid after due date.
“Whatever amount cardholders will save on account of the rate cut may be used by them to make additional purchases,” Pimentel said.
Pimentel noted that currently, banks impose between 36 percent to 42 percent per annum (or three to 3.5 percent monthly) in financing charges on all outstanding credit card balances.
“No matter how we look at it – with or without the COVID-19 crisis – the current financing charges slapped by banks on unpaid credit card balances are really excessive,” he said.
Pimentel thanked the BSP for giving in to his call for a rollback in credit card lending rates – five months ago – “to help consumers cope with the unprecedented economic pain caused by the COVID-19 pandemic.”
The House Deputy Speaker also lauded the BSP for lowering to P200 the maximum processing fee for every cash advance made through a credit card.
Citing the data from the Credit Card Association of the Philippines, he said Filipinos spent P1.2 trillion using their credit cards in 2019.
Currently, credit card cash advances slapped a processing fee of up to P500 for every P10,000, without counting financing charges, he said.
This prompted Pimentel to seek BSP’s “strong and timely intervention, considering that many Filipinos have been forced to stay home and rely increasingly on remote electronic transactions through their credit cards.”