MANILA—To prevent high interest rates and hidden charges on credit cards, Las Piñas Rep. Mark Villar filed a bill imposing a ceiling rate that credit card companies may impose on cardholders.
Villar said credit-card holders often find themselves disbelieving and in a state of shock by their credit-card statements, not because of the actual purchases made, but because of extremely high interest rates and hidden charges and penalties.
“These excessive interest rates and surcharges, more often than not, exceed the principal amount that the credit-card holders obtained as a loan,” Villar said. He also said this was the reason a lot of credit-card holders remain in debt, even though they had already paid off more than the principal amount they had actually borrowed. Clearly, this is unfair, he said.
Under House Bill 5201, interest rates on credit cards shall not exceed 1 percent per month, or 12 percent per annum. The ceiling rate for surcharges and penalties should also be 1 percent per month. The bill disallows compounding, or imposing an interest on the outstanding unpaid balance. Finally, the bill provides that no other charges shall be imposed.
The lawmaker said in his explanatory note that the Philippines is reported to have one of the highest interest charges on credit-card purchases relative to other countries.
The lawmaker also noted that in a year, interest rates amount to as high as 24 percent to 60 percent because of compounding and because there is no ceiling on interest.