MANILA - The Bangko Sentral ng Pilipinas said it has approved the increase in the monthly ceiling of fees imposed on unpaid credit card outstanding balance by 100 basis points to 3 percent from the previous 2 percent.
The existing ceiling on the month add-on rate that issuers can charge on installment loans, meanwhile, was maintained at a maximum rate of 1 percent, the central bank said in a statement.
Similarly, the maximum processing fee on the availment of credit card cash advances remains at P200 per transaction, it added.
“The policy aligns the credit card interest rate ceiling with developments in the macro economy and cushions the impact of inflationary pressure on banks’/credit card issuers’ ability to provide quality credit card services to their clients," BSP Governor Felipe Medalla said.
Medalla earlier said the Monetary Board would review the cap on credit card fees and charges after the recent interest rate hikes that brought the benchmark policy rate to 5.5 percent from 2.5 percent.
The 2 percent cap was placed by the BSP in 2020 as a "temporary relief measure" to ease the financial burden of the COVID-19 pandemic, it said.
The upward adjustment considers higher inflation and that it would help banks and credit card issuers cover higher costs related to handling of consumer transactions, the BSP said.
ING Bank Manila's Senior economist Nicholas Mapa said higher rates could dampen consumption.
Interest rate was raised to 5.5 percent in the last 6 months to tame inflation that hit 8.1 percent in December, or the highest since November 2008.
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