Meanwhile, the existing ceiling on the monthly add-on rate that credit card issuers can charge on installment loans is maintained at a maximum rate of one percent. Similarly, the maximum processing fee on the availment of credit card cash advances remains at P200 per transaction.
“The policy aligns the credit card interest rate ceiling with developments in the macroeconomy and cushions the impact of inflationary pressure on banks’/credit card issuers’ ability to provide quality credit card services to their clients,” Bangko Sentral ng Pilipinas (BSP) Gov. Felipe Medalla.
The caps on credit card transactions were imposed by the BSP as a temporary relief measure to ease the financial burden of consumers from the Covid-19 pandemic and promote affordable access to credit. In fixing the caps, the BSP considered the prevailing low interest rate environment during the pandemic.
The adjustment in the interest rate ceiling considers the upward trend in domestic interest rates on account of high inflation and BSP’s efforts to counter the same through successive policy rate hikes.
It will help banks/credit card issuers cover higher costs related to the efficient handling of consumer transactions, including prompt and timely dispute resolution, as well as the retention of competent personnel.
It will also make funding available for long-term investments that will institutionalize process improvements, strengthen cybersecurity and information technology systems, and nurture innovation in these financial institutions that will lead to better customer experience.(PR)