To dismantle the prevailing high interest rates and hidden charges in credit cards, Las Pinas representative Mark Villar has filed a bill imposing a ceiling rate that credit card companies can impose on cardholders.
Villar said credit card users often find themselves shocked by the amount of their bill — not because of the actual purchases they made but due to 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.
The lawmaker said in his bill?s explanatory note that the Philippines has significantly higher interest rates compared to other countries.
He said this is also the reason why credit card holders stay mired in debt even if they had already paid more than principal amount they actually borrowed.
Under House Bill 5201, interest rates on credit cards shall not exceed one percent per month, or 12 percent per annum. The ceiling rate for surcharges and penalties should be one percent per month.
The bill also disallows compounding interest, or imposing an interest on the outstanding unpaid balance. Currently, interest rates vary from 24 to 60 percent due to compounding rates and because of the lack no ceiling rates on interest. — PNA