Relief for credit card debts eyed


Consumers buried in credit card debt may have their worries eased should talks between the Bangko Sentral ng Pilipinas (BSP) and banks on a relief system prosper.

According to an official of the BSP, the merits of a “debt restructuring” system for credit cardholders suffering from income woes is being discussed by regulators with representatives of the banking sector.

“Debt restructuring” is a banking term that refers to a mechanism by which people, or entities, who can no longer afford to pay their debts are given some form of relief, such as staggered payment schemes and a reduction of interest rates.

Johnny Noe Ravalo, managing director at the BSP, said allowing debt restructuring for credit cardholders is beneficial not only for the borrowers but also for banks. Restructuring will encourage credit cardholders to still pay their obligations instead of running away from them.

It would also make the country’s financial system more mature, he said, adding that in advanced economies like the United States, such a system is observed.

But Ravalo said that guidelines for the implementation of a debt restructuring system must be clearly set so that banks avoid potential abuses by credit cardholders.

Credit cardholders could abuse the system by falsely claiming to be suffering from financial difficulty, he explained.

Data from the BSP showed that total credit card receivables of universal and commercial banks in the country amounted to P121.2 billion as of end-June 2011, up by 6 percent from P114.2 billion as of the same period of the previous year.

The latest figure accounted for 4.5 percent of total outstanding loans from universal and commercial banks.

Nonperforming credit card loans accounted for 12.9 percent of total credit card loans. The 12.9-percent nonperforming loans (NPL) ratio for credit cards is thus much higher than the overall NPL ratio for all types of loans, which is at less than 3 percent.

NPL ratio is the proportion of “nonperforming” or “bad debts” to total outstanding loans extended by banks. Loans are described as nonperforming or bad if these remain unpaid at least 30 days upon maturity.

Analysts said the relatively high NPL ratio for credit cards indicated that those who have credit card debts may be having more difficulty in paying their obligations.

Get Inquirer updates while on the go, add us on these apps:

Inquirer Viber

Disclaimer: The comments uploaded on this site do not necessarily represent or reflect the views of management and owner of We reserve the right to exclude comments that we deem to be inconsistent with our editorial standards.

  • Juan Carlo

    i love CREDIT CARDS!

  • roniega

    have you ever wondered why credit card companies offer cards without proper financial evaluation?
    ( its a secret. dont make me divulge it. lol!)

  • Blue Network

    Ang dami kasi sa ating mga kababayan na gusto magkaroon ng credit card kahit hindi kaya ng kanilang bulsa…basta lang may ipakita at ipagmayabang sa kapamilya, kaibigan at kakilala..^^

    • batangpaslit

      may kakilala ako, tumatanggap nang sahod na PhP20K. Ang fix xpenses nia ay mga 9K.
      magkasama sila ng dating niang classmate kaya ang household xpenses nia kalahati din, i.e., rent, utilities, communications.
      pero, she incurred a debt of PhP256,000.00 in a period of 10 months including interest.
      napag alaman ko, sumsabay pala sia sa mga classmates nia sa mga lakad like bakasyon sa mga lugar para sa mga foreign tourists. bili din sia ng Netbook at touchtone na celfon. eh, ang mga kaklase nia ay tumatanggap ng sueldo na tig 60K per month.
      bugbog ang credit card. bugbog din sia.
      mga classmates nia, took the risk of getting contractual jobs per project basis but pays lucrative pay.
      sia, takot mag adventure at umasa lang sa credit card.

  • parefrank

    Go to Europe f.i. and you will see that RP has a much worse system. It starts already with asking a higher price if paying with a card, even it violates the contract which say that card payment is cash payment. And too, the often much higher interests than in other countries. The card firms claim that they can not interfere in local rules which allow changes of contracts.

    • batangpaslit

      oppresive nga din ang mga charges ng credit card, at inaabuso ng mga retailers by charging extra chareges to items paid via credit card

  • Charles Chiu

    the use of Credit Cards, in any form, depends a great deal on both the user (borrower) and the issuer (lender).These cards encourage the user to spend money before their users earn it, thus compiling a list of IOUs, for which the lenders charge interest.
    The underlying principles of Cards are (1) the inability of the user to delay their purchases til such time as users have saved enough, and (2) the lenders’ ‘greed’ in charging above market rates and unconscionable penalties for delayed payments. These users and lenders are made for each other.

    As for the debt restructuring, (i.e. extending term payments and decreasing interest rates)–why should this be an ‘extraordianry remedy,’ when it can be done as a matter of more common procedure? Nagagawa naman pala, e, e bakit di gawin standard na lang yan? Then nobody has to watch out for misuses & abuses and suchlike. It is not surprising for us to learn that lenders also normally have a ‘reserve’ from which they may relieve themselves of bad debts. In fact much of these bad debts are then surrfendered or liquidated with the BSP in the name of maintaining liquidity. And where do you think the BSP charges the accumulation of bad debts but to ‘operating losses’ of the BSP? Then those losses are made up from the national budget which is financed by TAXES. In other words, these get charged to you and me, even if we have no participation in these credit card defaults, or other types of loans.

    How easy it is nowadays to get a credit card. Walk through a mall or a supermarket, and you encounter a dozen or half a dozen people enticing you to get a credit card, as if that were the ultimate status symbol (w/c, in a way it is, although I for one consider that a negative rather than a positive symbol). I have never accepted any such offer, now will I ever will. I do not believe in spending money that I don’t yet have.

  • ferds

    Credit card collection agencies are the most notorious, vicious and rude  here in the philippines.   I was even threatened  to be hurt or killed if i not pay my dues, then i talk to the man and i said  to him, punta ka dito put*&&na mo, ako papatay sa iyo, The day after i talked to the manager of the collector agency, and warned them i will make complain to the Central Bank, they never bothered me anymore.       Here is my advise :  DON’T BE FOOLED BY THESE COLLECTORS, your credit card obligation is a personal loan, It will become a written off acounts/bad debts.    That is why the interest charge is high, if you don’t pay, its like a bad account and to be written off anyway.

    SA SIMPLENG SALITA : HUWAG NINYONG PANSININ AT masisira lang ang ulo ninyo.
    NO ONE WILL BE JAILED if you cannot pay your obligation.    Its a civil obligation.


    • Jao Romero

      uutang-utang kasi, di naman pala kayang bayaran.

    • Ross18

       very true, dont let this demand letters stressed you out.

  • PinoyDude

    Credit card interest rates in the Philippines are by far one of the highest in the world–3.5% multiply that by 12 months is 42%. A whopping annual percentage rate.  

    This is to be blamed to our country being a high credit risk. A lot of people I know weren’t responsible enough. They either quit jobs, move residence, change phone numbers to evade credit card companies.

    Just live within your means. Delay instant gratification. If you want it save money for it.

    • brewny

      you are right dude

    • Jao Romero

      it’s not high credit risk per se of the country that jacks up the interest rates, but the absence of credit data. without a credit report, banks charge a flat rate to all credit card owners, regardless of their credit record (which is non-existent in the Philippines). in Western countries, you won’t be approved for a credit card unless you have a good credit score. what this means is that the good borrowers are subsidizing the bad borrowers. we must have credit reporting and recording so that credit card interest rates can be individualized, based on a person’s credit score.

      • PinoyDude

        In a few years, I hope we see the likes of TransUnion, Experian and Equifax in the Philippines. 

        I believe there is pending bill in Philippine Congress to create agencies similar to those.  We don’t have credit score in PI but we have credit history–still used by local banks to judge a person’s credit worthiness. If you’re new to the workforce in the Philippines–you may or may not qualify for a credit card.

        In other countries you can be sued and be chased down by banks based on your Social Security ID. 


      Living within one’s means is easier said than done… I have no credit card since I paid all of them in full in 2005. And I find it difficult, even with almost 7 years of practice, to just live on cash basis. Sporadic loans are necessary to keep up and you tend to lose on some prime discounts or promos offered by the credit card companies.

      On the topic, banks are doing these refinancing already when requested by the client. By legislating this facility, the client will be limited in what they can negotiate with the credit card company. Similar to the Magna Carta on Electricity, Meralco always points to this agreement in times of dispute. Having a similar one in credit card refinancing negotiations will definitely limit what we, the client, can ask from the card issuer.

To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.

Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:

c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City,Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


editors' picks



latest videos