Amid the economic and health crises, credit card users are reminded to be mindful of their purchases and to be keen on meeting regular payments.
The Credit Card Association of the Philippines (CCAP) said that the public should practice responsible credit card usage.
“A credit card is not a source of free money, so all of their (credit card holders) purchases should still be done prudently, and the minimum amount due every month should be paid on time to avoid penalties,” CCAP Executive Director Alex G. Ilagan told the BusinessMirror.
Earlier, CCAP even advised to “avoid maxing out their credit limits because it will reduce their credit score.”
He said a credit card is helpful during crises because it serves as an additional source of funding for emergencies.
In addition, Ilagan explained that a credit card line can be used to supplement the finances of households whose source of income has decreased—affecting the savings as well—amid the pandemic.
“Credit cards also present a variety of perks such as rewards, discounts and zero-interest installment in selected merchants that cardholders with good credit standing can enjoy,” he added.
The CCAP official noted that the financial institutions have been offering forbearance programs to extend relief to the borrowers. This is in addition to the 60-day grace period on debt payments provided by Republic Act 11494. The law provides for Covid-19 response and recovery interventions and providing mechanisms to accelerate the recovery and bolster the resiliency of the Philippine economy.
Recently, the Monetary Board approved setting the annual interest rate ceiling on all credit card transactions at 24 percent. This policy will be effective on November 3.
The Bangko Sentral ng Pilipinas (BSP) said that the interest rates or finance charges on unpaid outstanding credit card balance should only be 2 percent or lower monthly.
The maximum rates are subject to review by the Central Bank every six months.
According to latest BSP data, the banking sector’s credit card receivables stood at P412.7 billion as of end-June, which is higher than last year’s P396.35 billion for the same period.