The CCAP is deemed adequate, ensuring fair interest rates

The Credit Card Association of the Philippines (CCAP) voiced its full support for the Bangko Sentral ng Pilipinas (BSP) assessment process regarding potential adjustments to the credit card rate cap. Alex Ilagan, CCAP’s executive director, emphasized the importance of a balanced approach considering both consumer welfare and issuer sustainability. Ilagan praised the current limits as beneficial, particularly in the context of post-pandemic recovery. The BSP, which reviews credit card interest rate ceilings biannually, is currently evaluating whether to maintain or raise the three percent cap on credit card transactions. Last year, the central bank retained the maximum interest rate at three percent per month or 36 percent annually. The existing ceiling on monthly add-on rates for installment loans stands at one percent, with a maximum processing fee of P200 for credit card cash advances. Ilagan acknowledged the BSP’s proactive stance in assessing the credit card industry’s status, considering various factors such as macroeconomic indicators, financial institution stability, and consumer concerns. However, Ilagan cautioned against excessively stringent pricing regulations, which could limit credit access for riskier segments of the market, potentially driving them towards unregulated lenders with exorbitant rates. Despite concerns, credit card receivables and loans have seen significant growth, indicating sustained demand for revolving credit as a household funding source and payment instrument for merchants.

Business News: The CCAP is deemed adequate, ensuring fair interest rates