The BSP Raises Cap on Credit Card Transaction Interest Rates and Finance Charges

The Bangko Sentral ng Pilipinas (“BSP”) through the Monetary Board, in its Resolution No. 55 dated 13 January 2023, approved certain provisions amending the Manual of Regulations for Banks and the Manual of Regulations for Non-Bank Financial Institutions on the ceiling on interest or finance charges for credit card receivables. These amendments were then published by the BSP through the issuance of Circular No. 1165, Series of 2023. 

To alleviate the burden on Filipino consumers in the midst of the COVID-19 pandemic, the BSP issued Circular No. 1098 on 24 September 2020, imposing a 24% per year cap for the interest or finance charges on all credit card transactions.

However, with the issuance of BSP Circular No. 1165, banks and credit card issuers may now impose an interest or finance charge on all credit card transactions that does not exceed an annual interest rate of 36%, with the exception of credit card installment loans, which are subject to monthly add-on rates of no more than 1%.

Aside from the aforementioned applicable maximum interest rate caps, no other charge or fee shall be imposed or collected in the case of credit card cash advances, with the exception of a processing fee of PHP200.00 per transaction.

The maximum processing fee and interest rates or finance charges shall be subject to review by BSP every 6 months. 
To view the full text of the Circular, please refer to this link.