Central bank maintains credit card fee cap
THE central bank has maintained fee caps on credit card transactions to help consumers as the coronavirus disease 2019 (COVID-19) pandemic continues.
The Monetary Board has kept the maximum interest rate on outstanding credit card balances at 2% per month or 24% per annum, the Bangko Sentral ng Pilipinas (BSP) said in a statement on Tuesday.
The cap on the additional monthly rate that credit card issuers can charge on installment loans has been kept at 1%, while the maximum processing fee for credit card cash advances will remain at P200 per transaction.
“The Monetary Board’s decision will continue to help ease the financial burden on consumers through aFaffordable credit card pricing amid the ongoing COVID-19 pandemic,” said BSP Governor Benjamin E. Diokno.
“It will also allow the BSP to assess the impact of improving macroeconomic fundamentals and easing mobility restrictions on the performance of the credit card industry,” Diokno added.
Limits on credit card transactions will remain in place unless changed.Ifby BSP.
“BSP, however, will closely monitor domestic and external developments that will impact the state of credit card funding, the sustainability of credit card operations, and the viability of bank/credit card issuers. credit,” the central bank said.
The BSP said recent data showed demand for credit cards weakened in the second half of 2021 as customers shiFalternative digital products.
Still, credit cards issued and in circulation increased by 0.3% to 10.3 million, while monthly card billings increased by 33.9% year-on-year to 100.6 billion pula at end of December 2021.
Credit card receivables increased 4.9% year-on-year from December 2021 amid easing mobility restrictions and business continuity.
Lenders have also been able to maintain healthy asset quality in their credit card portfolios. The credit card industry’s non-performing loan (NPL) ratio was 6.8% in December 2021, down from 8.9% recorded the previous year, with an NPL coverage ratio of 109.5 %.
“Going forward, the credit card industry intends to further reduce operating costs through digital transformation and process improvements, as well as maintain prudent lending standards,” said said the central bank. — KB Ta-asan