A lawmaker has filed a bill prohibiting credit card companies, banks and similar institutions from imposing hidden penalties or costs on purchases and cash advances made by their clients.
Rep. Raymond Mendoza (Party-list, TUCP) filed House Bill 2551 as he noted the urgent need to protect the consuming public from the exorbitant rates being imposed by the credit card companies and banks.
Mendoza said the monthly rates range from 2.5 to 3.5 percent for cumulative non-compounded interest rates of 30 to 42 percent per year.
"With the penalty, late payment fees and other charges compounding, the rate is more than what '5-6' operators charge," Mendoza said.
Mendoza cited the ruling of the Supreme Court on the case of depositor Ileana Macalinao versus Bank of the Philippine Island (BPI) on September 19, 2009.
Mendoza quoted the High Tribunal's decision, which ruled, "We are of the opinion that the interest rate and penalty charge should be equitably reduced to 2 percent per month or 24 percent per annum."
Mendoza said the bill will put into effect the cap on interest rates and penalty charges as ruled by the Supreme Court.
Mendoza said the bill prohibits credit card companies from charging fees for exceeding the cardholder's credit limit.
"Such fees are unconscionable since the credit card companies themselves authorized individual transactions which resulted in cardholders exceeding their credit limits," Mendoza said.
Under the bill, interest rates imposed by credit card companies on purchases and cash advances made through such facility shall in no case be higher than 1 percent per month or 12 percent per annum, without compounding.
Surcharges or penalties shall likewise be limited to a ceiling of 1 percent per month, without compounding.
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