BSP maintains limit on credit card transactions

According to Bangko Sentral ng Pilipinas (BSP), the Monetary Board has decided to maintain the existing ceilings for credit card transactions.

BSP stated that this decision supports the provisions of Circular 1098 of September 24, 2020. Therefore, the following ceilings remain in effect.

The BSP said the “reasonableness” of the credit ceilings will be reviewed again in January next year.

“BSP will continue to closely monitor internal and external developments that will affect the state of credit card funding, the sustainability of credit card operations, and the viability of banks/credit card issuers,” it said in a statement.

Circular 1098 provides that the maximum interest rate or finance charge on a cardholder’s outstanding credit card balance is 2 percent per month or 24 percent per year.

It also stipulates that the maximum monthly additional rate on credit card installment loans will be one percent.

BSP also said that the maximum processing fee for credit card cash advances is 200 pesos per transaction.

Formerly Asia United Bank Corp. Maria Magdalena V. Surtida, senior vice president and head of the card and acquiring business group, said that in light of higher interest rates, increasing credit card rate limits is “always on the table.”

However, according to her, AUB cooperates with BSP and trusts their judgment. Surtida said it regularly reviews macroeconomic data to support its decisions.

In terms of credit card growth, Surtida said AUB is optimistic. She said the country has recovered from the pandemic and that is fueling credit card consumption.

Last month, BSP said that as of July of this year, credit card payments in the country have increased by 20 percent.

Gov. Felipe M. Medalla said credit card receivables began to rise at double digits in 2022, hitting 20.4 percent year-on-year in July 2022. He added that the non-performing loan ratio fell to 5.7 percent over the period.

BSP Deputy Governor Chuchi G. Fonasier said the credit card industry has also been at the forefront of extending temporary Central Bank relief measures for Filipinos during the pandemic.

Fonacieux said that as of July 2022, most of the restructured consumer loans were credit card receivables of 6 billion pesos, representing 56.3 percent of the total for that period.